What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2020-11-13 · 342 added, 287 removed, 515 unchanged (55% of the section changed)

FINANCIAL STATEMENTS

ITEM 1.FINANCIAL STATEMENTS

Richmond Mutual Bancorporation, Inc.

Condensed Consolidated Balance Sheets

September 30, 2020

2021 December 31,

4 unchanged sentences

Investment securities - held to maturity 10,211,437 12,225,275

Loans and leases, net of allowance for losses of $ 9,809,000 and

$ 7,089,000 , respectively

Loans and leases, net of allowance for losses of $ 10,959,000 and $ 10,586,000 , respectively

763,731,414 736,400,098

Premises and equipment, net 14,718,289 14,892,110

3 unchanged sentences

Cash surrender value of life insurance 3,548,371 3,525,736

1,054,889,523

Non-interest bearing deposits

Other assets 10,102,117 8,410,450

Total assets $ 1,140,905,902 $ 1,084,192,657

Noninterest-bearing deposits 118,075,878 98,724,887

Interest bearing deposits 638,997,768 594,320,508

10 unchanged sentences

Authorized - 90,000,000 shares

Issued and outstanding – 12,944,546 shares

and 13,526,625 shares, respectively

Issued and outstanding - 13,050,996 shares and 13,193,760 shares at March 31, 2021 and December 31, 2020, respectively

130,510 131,938

Additional paid-in capital 122,814,920 124,246,425

1 unchanged sentence

Unearned employee stock ownership plan (ESOP) ( 13,479,847 ) ( 13,664,373 )

( 13,848,900 )

( 14,400,386 )

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income 48,399 3,708,605

Total stockholders' equity 189,519,634 192,712,708

Total liabilities and stockholders' equity $ 1,140,905,902 $ 1,084,192,657

1,054,889,523

See Notes to Condensed Consolidated Statements.

Richmond Mutual Bancorporation, Inc.

Condensed Consolidated Statements of Income (Loss)

Three Months Ended September 30,

Nine Months Ended September 30,

Condensed Consolidated Statements of Income

Three Months Ended March 31,

Interest Income

1 unchanged sentence

Investment securities 1,009,239 1,262,937

Other 6,904 125,030

Total interest income 10,644,448 10,451,534

Interest Expense

Deposits 1,187,272 1,824,698

Borrowings 693,951 739,341

Total interest expense 1,881,223 2,564,039

1 unchanged sentence

Provision for losses on loans and leases 400,000 210,000

Net Interest Income After Provision for Losses

on Loans and Leases

Net Interest Income After Provision for Losses on Loans and Leases 8,363,225 7,677,495

Non-Interest Income

2 unchanged sentences

Loan and lease servicing fees ( 105,450 ) ( 65,692 )

Net gains on securities (includes $ 117,304 , $ 21,827 ,

$ 196,317 and $ 83,059 , respectively, related to

accumulated other comprehensive loss

reclassifications)

Net gains on securities (includes $ 0 and $ 69,139 , respectively, related to accumulated other comprehensive loss reclassifications)

Net gains on loan and lease sales 964,817 228,208

Other loan fees 247,891 82,874

Other income 222,372 204,281

Total non-interest income 1,766,584 953,068

11 unchanged sentences

Loss on sale of real estate owned 1,278 —

Donation to establish First Bank Richmond Charitable Foundation

Other expenses 771,210 664,274

Total non-interest expenses 6,977,656 5,523,617

Income Before Income Tax Expense (Benefit)

Provision (benefit) for income taxes (includes $ 24,634 ,

$ 5,661 , $ 41,226 and $ 21,544 , respectively, related to

income tax expense from reclassification of items)

Net Income (Loss)

Income Before Income Tax Expense 3,152,153 3,106,946

Provision for income taxes (includes $ 0 and $ 17,522 , respectively, related to income tax expense from reclassification of items)

589,667 654,800

Earnings (Loss) Per Share

Net Income $ 2,562,486 $ 2,452,146

Earnings Per Share

Basic $ 0.22 $ 0.20

Diluted $ 0.22 $ 0.20

See Notes to Condensed Consolidated Statements.

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net Income (Loss)

Other Comprehensive Income

Unrealized gain on available-for-sale securities, net of tax

expense of $ 45,101 , $ 175,173 , $ 1,040,994 and $ 1,400,357 ,

respectively.

reclassification adjustment for realized gains

included in net income, net of tax expense of $ 24,634 , $ 5,661 ,

$ 41,226 and $ 21,544 , respectively.

Comprehensive Income (Loss)

Net Income $ 2,562,486 $ 2,452,146

Other Comprehensive Income (Loss)

Unrealized gain (loss) on available-for-sale securities, net of tax (benefit) expense of $( 972,966 ) and $ 957,976 , respectively.

( 3,660,206 ) 2,821,591

reclassification adjustment for realized gains included in net income, net of tax expense of $ 0 and $ 17,523 , respectively.

( 3,660,206 ) 2,769,975

Comprehensive (Loss) Income $ ( 1,097,720 ) $ 5,222,121

See Notes to Condensed Consolidated Statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Comprehensive

Income/(Loss)

Balances, June 30, 2020

Other comprehensive income

ESOP shares earned

Common stock dividends ($0.05 per share)

Repurchase of common stock

Balances, September 30, 2020

Common Stock Additional

Capital Retained

Earnings Unearned

Shares Accumulated

Comprehensive

Income/(Loss)

Income/(Loss) Total

Outstanding Amount

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

Other comprehensive income

Net income — — — 2,562,486 — — 2,562,486

Other comprehensive loss — — — — — ( 3,660,206 ) ( 3,660,206 )

ESOP shares earned — — ( 1,821 ) — 184,526 — 182,705

Stock based compensation — — 507,624 — — — 507,624

Common stock dividends ($ 0.07 per share)

— — — ( 846,947 ) — — ( 846,947 )

Repurchase of common stock ( 142,764 ) ( 1,428 ) ( 1,937,308 ) — — — ( 1,938,736 )

Balances, September 30, 2020

Comprehensive

Income/(Loss)

Balances, June 30, 2019

Other comprehensive income

ESOP shares earned

Issuance of common stock, net of offering costs

Stock contributed to charitable foundation

Reorganization of Richmond Mutual Bancorporation

Balances, September 30, 2019

Balances, March 31, 2021 13,050,996 $ 130,510 $ 122,814,920 $ 80,005,652 $ ( 13,479,847 ) $ 48,399 $ 189,519,634

Common Stock Additional

Capital Retained

Earnings Unearned

Shares Accumulated

Comprehensive

Income/(Loss)

Income/(Loss) Total

Outstanding Amount

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

Net income — — — 2,452,146 — — 2,452,146

Other comprehensive income — — — — — 2,769,975 2,769,975

ESOP shares earned — — 2,858 — 183,829 — 186,687

Issuance of common stock, net of offering costs

Stock contributed to charitable foundation

Reorganization of Richmond Mutual Bancorporation

Balances, September 30, 2019

Balances, March 31, 2020 13,526,625 $ 135,266 $ 132,604,734 $ 72,563,580 $ ( 14,216,557 ) $ 2,109,231 $ 193,196,254

See Notes to Condensed Consolidated Statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

Net income $ 2,562,486 $ 2,452,146

Items not requiring (providing) cash

2 unchanged sentences

Deferred income tax ( 93,250 ) ( 84,000 )

Investment securities (accretion) amortization, net

Stock based compensation 507,624 —

Investment securities amortization, net 712,845 486,500

Investment securities gains — ( 69,139 )

Gain on sale of loans and leases held for sale

Net gains on loan and lease sales ( 964,817 ) ( 228,208 )

Loss on sale of real estate owned 1,278 —

1 unchanged sentence

Amortization of mortgage-servicing rights 128,288 67,132

Common stock contributed to Foundation

ESOP shares expense 182,705 186,687

4 unchanged sentences

Interest receivable 499,613 ( 195,661 )

Other assets ( 500,776 ) 354,702

Other liabilities ( 4,151,093 ) 26,550

Interest payable ( 14,225 ) 53,692

Net cash provided by operating activities

Net cash (used in) provided by operating activities ( 2,435,728 ) 4,769,994

Investing Activities

Purchases of securities available for sale ( 37,779,114 ) ( 70,744,743 )

( 129,901,076

( 109,895,626

Proceeds from maturities and paydowns of securities available for sale 18,783,517 25,505,906

2 unchanged sentences

Net change in loans ( 25,020,579 ) ( 1,169,710 )

Purchases of premises and equipment

Proceeds from sales of real estate owned 30,270 —

Purchases of premises and equipment ( 119,581 ) ( 158,241 )

Purchase of FHLB stock — ( 1,030,400 )

7 unchanged sentences

Repayment of FHLB advances — ( 2,000,000 )

Repayment of other borrowings

Proceeds from stock conversion

Repurchase of common stock ( 1,938,736 ) —

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands)

(Table Dollar Amounts in Thousands except shares and per share amounts)

Basis of Presentation

24 unchanged sentences

The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan.

principal balance of the loan.

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

Accounting Pronouncements

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

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

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

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

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

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

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

The Company adopted this guidance effective March 27, 2020.

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

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

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

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

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

In March 2020, the novel coronavirus disease of 2019 ("COVID-19") was identified as a global pandemic and began affecting the health of large populations around the world.

As a result of the spread of COVID-19, economic uncertainties arose which can ultimately affect the financial position, results of operations and cash flows of the Company, as well as the Company's customers.

In response to economic concerns over COVID-19, in March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was passed into law by the United States Congress ("Congress").

The CARES Act included relief for individual Americans, health care workers, small businesses and certain industries hit hard by the COVID-19 pandemic.

The 2021 Consolidated Appropriations Act , passed by Congress in December 2020, extended certain provisions of the CARES Act affecting the Company into 2021.

The CARES Act included several provisions designed to help financial institutions like the Company in working with their customers.

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

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

As of March 31, 2021, the Company has 33 loans outstanding for $ 24.6 million that were modified under the CARES Act guidance.

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

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

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

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

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

The Company has originated a total of approximately $ 100.0 million in PPP loans as of March 31, 2021, of which approximately $ 54.7 million were outstanding at March 31, 2021.

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

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

2 unchanged sentences

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

In June 2016, the FASB issued ASU No.

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

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

9 unchanged sentences

Targeted Transition Relief” (ASU 2019-05).

This ASU provides transition relief for entities adopting

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

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

In April 2019, the FASB issued ASU No.

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

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

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

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

4 unchanged sentences

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

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

Additionally, we have formed an implementation team that meets on a regular basis to coordinate efforts of our accounting, credit and operations areas.

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

5 unchanged sentences

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

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

The adoption of ASU 2020-04 did not have a material impact on the Company's consolidated financial statements.

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

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

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

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

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

4 unchanged sentences

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

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

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement .

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

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

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

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

In February 2016, the FASB has issued ASU No.

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

11 unchanged sentences

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:

September 30, 2020

March 31, 2021

Available for sale

treasury securities

SBA Pools $ 15,647 $ 36 $ 155 $ 15,528

Federal agencies 7,756 5 228 7,533

State and municipal obligations 100,347 1,599 1,610 100,336

Mortgage-backed securities -

government-sponsored enterprises

(GSE) residential

Mortgage-backed securities - government-sponsored enterprises (GSE) residential 134,335 1,618 1,204 134,749

Equity securities 13 — — 13

258,098 3,258 3,197 258,159

Held to maturity

State and municipal obligations 10,211 234 — 10,445

10,211 234 — 10,445

Total investment securities $ 268,309 $ 3,492 $ 3,197 $ 268,604

1 unchanged sentence

Available for sale

Treasury securities

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

Federal agencies 5,760 12 15 5,757

State and municipal obligations 93,616 2,778 109 96,285

Mortgage-backed securities -

government-sponsored enterprises

(GSE) residential

Mortgage-backed securities - government-sponsored enterprises (GSE) residential 124,139 2,080 69 126,150

Equity securities 13 — — 13

239,811 4,981 287 244,505

Held to maturity

State and municipal obligations 12,225 295 — 12,520

12,225 295 — 12,520

Total investment securities $ 252,036 $ 5,276 $ 287 $ 257,025

The amortized cost and fair value of securities at September 30, 2020, by contractual maturity, are shown below.

The amortized cost and fair value of securities at March 31, 2021, by contractual maturity, are shown below.

Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Available for Sale

Held to Maturity

Available for Sale Held to Maturity

Value Amortized

Within one year $ 954 $ 959 $ 1,751 $ 1,766

2 unchanged sentences

After ten years 88,021 87,258 1,060 1,070

Mortgage-backed securities -

GSE residential

123,750 123,397 10,211 10,445

Mortgage-backed securities –GSE residential 134,335 134,749 — —

Equity securities 13 13 — —

Securities with a carrying value of $ 99,128 ,000 and $ 114,907 ,000 were pledged at September 30, 2020 and December 31, 2019, respectively, to secure certain deposits and for other purposes as permitted or required by law.

Proceeds from sales of securities available for sale for the three and nine months ended September 30, 2020 were $ 12,560 ,000 and $ 34,738 ,000, respectively.

For the three and nine months ended September 30, 2019, proceeds from sales of securities were $ 35,247 ,000 and $ 57,704 ,000 respectively.

Gross gains were recognized on the sale of securities available-for-sale for the three and nine months ended September 30, 2020 and 2019 of $ 120 ,000, $ 255 ,000, $ 104 ,000 and $ 170 ,000, respectively.

Gross losses were recognized on the sale of securities available for sale for the three and nine months ended September 30, 2020 of $ 3 ,000 and $ 59 ,000, respectively.

Gross losses were recognized on the sale of securities available for sale for the three and nine months ended September 30, 2019 of $ 82 ,000 and $ 87 ,000, respectively.

Totals $ 258,098 $ 258,159 $ 10,211 $ 10,445

Securities with a carrying value of $ 74,171,000 and $ 88,370,000 were pledged at March 31, 2021 and December 31, 2020, respectively, to secure certain deposits and for other purposes as permitted or required by law.

Proceeds from sales of securities available for sale for the three months ended March 31, 2021 and 2020 were $ 0 and $ 11,461,000 , respectively.

Gross gains were recognized on the sale of securities available-for-sale for the three months ended March 31, 2021 and 2020 of $ 0 and $ 74,000 , respectively.

Gross losses were recognized on the sale of securities available for sale for the three months ended March 31, 2021 and 2020 of $ 0 and $ 5,000 , respectively.

Certain investments in debt securities, as reflected in the table below, are reported in the condensed consolidated financial statements and notes at an amount less than their historical cost.

Total fair value of these investments at September 30, 2020 and December 31, 2019 was $ 42,956 ,000 and $ 138,391 ,000, respectively, which is approximately 18 % and 63 % of the Company’s aggregated available-for-sale and held-to-maturity investment portfolio at those dates, respectively.

Total fair value of these investments at March 31, 2021 and December 31, 2020 was $ 120,426,000 and $ 45,299,000 , respectively, which is approximately 45 % and 18 % of the Company’s aggregated available-for-sale and held-to-maturity investment portfolio at those dates, respectively.

These declines primarily resulted from changes in market interest rates since their purchase.

1 unchanged sentence

Should the impairment of any other securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following tables show the Company’s investments by gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2020 and December 31, 2019:

September 30, 2020

Less Than 12 Months

12 Months or More

Description of

Securities March 31, 2021

Less Than 12 Months 12 Months or More Total

Value Unrealized

Available-for-sale

SBA Pools $ 4,318 $ 83 $ 7,984 $ 72 $ 12,302 $ 155

Federal agencies 6,773 228 — — 6,773 228

State and municipal obligations 45,177 1,505 1,475 105 46,652 1,610

Mortgage-backed securities -

GSE residential

Total available-for-sale

Total temporarily

impaired securities

December 31, 2019

Less Than 12 Months

12 Months or More

Mortgage-backed securities - GSE residential 54,165 1,202 534 2 54,699 1,204

Total temporarily impaired securities $ 110,433 $ 3,018 $ 9,993 $ 179 $ 120,426 $ 3,197

Description of

Securities December 31, 2020

Less Than 12 Months 12 Months or More Total

Value Unrealized

Available-for-sale

Treasury securities

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

Federal agencies 985 15 — — 985 15

State and municipal obligations 8,587 109 — — 8,587 109

Mortgage-backed securities -

GSE residential

Mortgage-backed securities - GSE residential 24,013 67 684 2 24,697 69

Total available-for-sale 38,798 237 6,371 50 45,169 287

1 unchanged sentence

State and municipal obligations 130 — — — 130 —

Total temporarily

impaired securities

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

Federal Agencies.

2 unchanged sentences

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

Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2020.

Mortgage-Backed Securities – GSE Residential and SBA Pools.

1 unchanged sentence

The Company expects to recover the amortized cost basis over the term of the securities.

Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2020.

State and Municipal Obligations.

1 unchanged sentence

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

Loans, Leases and Allowance

The following table shows the composition of the loan and lease portfolio at September 30, 2020 and December 31, 2019:

September 30,

The following table shows the composition of the loan and lease portfolio at March 31, 2021 and December 31, 2020:

2021 December 31,

Commercial mortgage $ 254,561 $ 247,564

1 unchanged sentence

Construction and development 67,728 58,424

Multi-family 60,608 55,998

Residential mortgage 128,947 127,108

Home equity 6,104 5,982

Direct financing leases 117,725 117,171

Consumer 13,183 13,257

776,982 748,335

Allowance for loan and lease losses 10,959 10,586

Deferred loan fees 2,292 1,349

The following tables present the activity in the allowance for loan and lease losses for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, 2020:

Balance, beginning of period

Provision (credit) for losses

Balance, end of period

Nine Months Ended September 30, 2020:

Balance, beginning of period

Provision (credit) for losses

Balance, end of period

(1) Commercial mortgage includes commercial and multifamily real estate loans.

(2) Residential mortgage includes one- to four-family and home equity loans.

Three Months Ended September 30, 2019:

$ 763,731 $ 736,400

The following tables present the activity in the allowance for loan and lease losses for the three months ended March 31, 2021 and 2020:

Mortgage (1) Commercial

Industrial Residential

Mortgage (2) Leases Consumer Total

Three Months Ended March 31, 2021:

Balance, beginning of period $ 7,797 $ 1,248 $ 270 $ 1,054 $ 217 $ 10,586

Provision (credit) for losses 561 ( 133 ) ( 19 ) 75 ( 84 ) 400

Charge-offs — — — ( 194 ) ( 11 ) ( 205 )

Recoveries 1 23 6 94 54 178

Balance, end of period $ 8,359 $ 1,138 $ 257 $ 1,029 $ 176 $ 10,959

Nine Months Ended September 30, 2019:

(1) Commercial mortgage includes commercial and multifamily real estate loans and commercial construction and development loans.

(2) Residential mortgage includes one- to four-family and home equity loans and residential construction and development loans.

Mortgage (1) Commercial

Industrial Residential

Mortgage (2) Leases Consumer Total

Three Months Ended March 31, 2020:

Balance, beginning of period $ 4,564 $ 1,852 $ 109 $ 426 $ 138 $ 7,089

Provision (credit) for losses 72 ( 87 ) 38 190 ( 4 ) 210

Charge-offs — — ( 15 ) ( 55 ) ( 5 ) ( 75 )

Recoveries 32 7 16 22 6 83

Balance, end of period $ 4,668 $ 1,772 $ 148 $ 583 $ 135 $ 7,306

(1) Commercial mortgage includes commercial and multifamily real estate loans.

(2) Residential mortgage includes one- to four-family and home equity loans.

The following tables present the balance in the allowance for loan and lease losses and the recorded investment in loans and leases based on portfolio segment and impairment method as of September 30, 2020 and December 31, 2019:

September 30, 2020

(1) Commercial mortgage includes commercial and multifamily real estate loans and commercial construction and development loans.

(2) Residential mortgage includes one- to four-family and home equity loans and residential construction and development loans.

March 31, 2021

Mortgage (1) Commercial

Industrial Residential

Mortgage (2) Leases Consumer Total

Allowance for loan and lease losses:

1 unchanged sentence

Collectively evaluated for impairment 7,548 1,086 257 1,029 176 10,096

Balance, September 30

Balance, March 31 $ 8,359 $ 1,138 $ 257 $ 1,029 $ 176 $ 10,959

Loans and leases:

1 unchanged sentence

Collectively evaluated for impairment 427,822 111,660 96,465 117,725 17,101 770,773

Ending balance:September 30

(1) Commercial mortgage includes commercial and multifamily real estate loans.

(2) Residential mortgage includes one- to four-family and home equity loans.

Ending Balance, March 31 $ 433,403 $ 112,110 $ 96,643 $ 117,725 $ 17,101 $ 776,982

(1) Commercial mortgage includes commercial and multifamily real estate loans and commercial construction and development loans.

(2) Residential mortgage includes one- to four-family and home equity loans and residential construction and development loans.

December 31, 2020

Mortgage (1) Commercial

Industrial Residential

Mortgage (2) Leases Consumer Total

Allowance for loan and lease losses:

6 unchanged sentences

Ending Balance, December 31 $ 404,979 $ 107,287 $ 101,649 $ 117,171 $ 17,249 $ 748,335

(1) Commercial mortgage includes commercial and multifamily real estate loans.

(2) Residential mortgage includes one- to four-family and home equity loans.

(1) Commercial mortgage includes commercial and multifamily real estate loans and commercial construction and development loans.

(2) Residential mortgage includes one- to four-family and home equity loans and residential construction and development loans.

The Company rates all loans and leases by credit quality using the following designations:

52 unchanged sentences

Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria.

In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk.

In general, the Company avoids financing single purpose projects unless other underwriting factors are

present to help mitigate risk.

In addition, management tracks the level of owner-occupied commercial real estate versus nonowner-occupied loans.

8 unchanged sentences

For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded.

Brokered mortgages are purchased residential mortgage loans meeting the Company’s criteria established

for originating residential mortgage loans.

Brokered mortgages are purchased residential mortgage loans meeting the Company’s criteria established for originating residential mortgage loans.

Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans are secured by consumer personal assets, such as automobiles or recreational vehicles.

6 unchanged sentences

A determination is made as to the applicant’s financial condition and ability to repay in accordance with the proposed terms as well as an overall assessment of the risks involved.

The following tables present the credit risk profile of the Company’s loan and lease portfolio based on rating category and payment activity as of September 30, 2020 and December 31, 2019:

September 30, 2020

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

March 31, 2021

Mortgage Industrial Construction

Development Multi-

Family Residential

Mortgage Home

Equity Leases Consumer Total

1-4 Pass $ 246,578 $ 121,798 $ 62,828 $ 60,608 $ 126,766 $ 6,033 $ 117,661 $ 12,867 $ 755,139

5 Special Mention 6,939 3,514 — — — — — — 10,453

6 Substandard 1,044 2,814 4,900 — 2,181 71 11 316 11,337

7 Doubtful — — — — — — 53 — 53

8 Loss — — — — — — — — —

$ 254,561 $ 128,126 $ 67,728 $ 60,608 $ 128,947 $ 6,104 $ 117,725 $ 13,183 $ 776,982

December 31, 2020

Mortgage Industrial Construction

Development Multi-

Family Residential

Mortgage Home

Equity Leases Consumer Total

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

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

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

The following tables present the Company’s loan and lease portfolio aging analysis of the recorded investment in loans and leases as of September 30, 2020 and December 31, 2019:

September 30, 2020

Delinquent Loans

7 Doubtful — — — — — — 20 — 20

8 Loss — — — — — — — — —

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

The following tables present the Company’s loan and lease portfolio aging analysis of the recorded investment in loans and leases as of March 31, 2021 and December 31, 2020:

March 31, 2021

Delinquent Loans Current Total

Leases Total Loans

Past Due 60-89 Days

Past Due 90 Days and

Over Total Past

Commercial mortgage $ 431 $ — $ 210 $ 641 $ 253,920 $ 254,561 $ 134

1 unchanged sentence

Construction and development — — 4,900 4,900 62,828 67,728 —

Multi-family — — — — 60,608 60,608 —

Residential mortgage 2,071 142 2,154 4,367 124,580 128,947 2,029

Home equity 7 — 31 38 6,066 6,104 31

Leases 136 21 — 157 117,568 117,725 —

Consumer 140 277 316 733 12,450 13,183 315

Totals $ 2,785 $ 464 $ 8,008 $ 11,257 $ 765,725 $ 776,982 $ 2,509

December 31, 2020

Delinquent Loans

Delinquent Loans Current Total

Leases Total Loans

Past Due 60-89 Days

Past Due 90 Days and

Over Total Past

Commercial mortgage $ 340 $ — $ 1,177 $ 1,517 $ 246,047 $ 247,564 $ 1,100

1 unchanged sentence

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

Multi-family — — — — 55,998 55,998 —

Residential mortgage 1,913 243 2,680 4,836 122,272 127,108 2,554

The following tables present the Company’s impaired loans and specific valuation allowance at September 30, 2020 and December 31, 2019:

September 30, 2020

Impaired loans without a specific

valuation allowance

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

Leases 234 65 — 299 116,872 117,171 —

Consumer 318 129 317 764 12,493 13,257 317

Totals $ 4,194 $ 5,555 $ 4,638 $ 14,387 $ 733,948 $ 748,335 $ 3,996

The following tables present the Company’s impaired loans and specific valuation allowance at March 31, 2021 and December 31, 2020:

March 31, 2021

Balance Unpaid

Balance Specific

Impaired loans without a specific valuation allowance

Commercial mortgage $ 77 $ 86 $ —

1 unchanged sentence

Residential mortgage 124 246 —

Impaired loans with a specific

valuation allowance

$ 598 $ 1,063 $ —

Impaired loans with a specific valuation allowance

Commercial mortgage $ 5,504 $ 5,504 $ 811

1 unchanged sentence

Residential mortgage 54 54 —

$ 5,611 $ 5,622 $ 863

Total impaired loans

4 unchanged sentences

December 31, 2020

Impaired loans without a specific

valuation allowance

Commercial mortgage

Commercial and industrial

Residential mortgage

Impaired loans with a specific

valuation allowance

Commercial and industrial

Total impaired loans

Balance Unpaid

Balance Specific

Impaired loans without a specific valuation allowance

Commercial mortgage $ 76 $ 86 $ —

1 unchanged sentence

Residential mortgage 269 491 —

Total impaired loans

The following tables present the Company’s average investment in impaired loans and interest income recognized for the three and nine months ended September 30, 2020 and 2019.

Investment in

Three Months Ended September 30, 2020:

Total impaired loans

$ 784 $ 1,347 $ —

Impaired loans without a specific valuation allowance

Commercial mortgage $ 625 $ 625 $ 150

Commercial and industrial 54 64 52

Residential mortgage

Total impaired loans

Investment in

Nine Months Ended September 30, 2020:

$ 679 $ 689 $ 202

Total impaired loans

3 unchanged sentences

Total impaired loans $ 1,463 $ 2,036 $ 202

The following tables present the Company’s average investment in impaired loans and interest income recognized for the three months ended March 31, 2021 and 2020:

Investment in

Three Months Ended September 30, 2019:

Loans Interest

Three Months Ended March 31, 2021:

Total impaired loans

4 unchanged sentences

Investment in

Nine Months Ended September 30, 2019:

Loans Interest

Three Months Ended March 31, 2020:

Total impaired loans

3 unchanged sentences

Total impaired loans $ 1,807 $ 26

The following table presents the Company’s nonaccrual loans and leases at September 30, 2020 and December 31, 2019:

September 30,

The following table presents the Company’s nonaccrual loans and leases at March 31, 2021 and December 31, 2020:

2021 December 31,

Commercial mortgage $ 77 $ 76

Commercial and industrial 450 493

Construction 4,900 —

Residential mortgage 124 214

During the three and nine months ended September 30, 2020 and 2019, there were no newly classified troubled debt restructured loans or leases (“TDRs”).

For the three and nine months ended September 30, 2020 and 2019, the Company recorded no charge-offs related to TDRs.

As of both September 30, 2020 and December 31, 2019, TDRs had a related allowance of $ 52 ,000.

During the three and nine months ended September 30, 2020, there were no TDRs for which there was a payment default within the first 12 months of the modification.

The Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act") provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs.

$ 5,604 $ 803

During the three months ended March 31, 2021 and 2020, there were no newly classified troubled debt restructured loans or leases (“TDRs”).

For the three months ended March 31, 2021 and 2020, the Company recorded no charge-offs related to TDRs.

As of both March 31, 2021 and December 31, 2020, TDRs had a related allowance of $ 52,000 .

During the three months ended March 31, 2021, there were no TDRs for which there was a payment default within the first 12 months of the modification.

The CARES Act provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs.

This includes short-term (e.g.

2 unchanged sentences

In March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic.

As of September 30, 2020, the Company had 70 loan and lease modifications outstanding related to the COVID-19 pandemic with an outstanding loan balance totaling $35.3 million in accordance with the CARES Act.

As of March 31, 2021, the Company had 33 loan and lease modifications outstanding related to the COVID-19 pandemic with an outstanding loan balance totaling $ 24.6 million in accordance with the CARES Act.

Accordingly, the Company does not account for such loan modifications as TDRs.

Loan modifications in accordance with the CARES Act and related regulatory guidance are still subject to an evaluation in regard to determining whether or not a loan is deemed to be impaired.

At September 30, 2020 and December 31, 2019, the balance of real estate owned includes $ 32 ,000 and $ 0 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At September 30, 2020 and December 31, 2019, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceeds were in process was $ 283 ,000 and $ 190 ,000, respectively.

At March 31, 2021 and December 31, 2020, the balance of real estate owned includes $ 0 and $ 32,000 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At March 31, 2021 and December 31, 2020, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceeds were in process was $ 520,000 and $ 283,000 , respectively.

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

September 30,

2021 December 31,

Total minimum lease payments to be received $ 129,865 $ 129,114

Initial direct costs 6,639 6,353

136,504 135,467

Unearned income ( 18,779 ) ( 18,296 )

Net investment in direct finance leases $ 117,725 $ 117,171

Leases serviced by First Bank Richmond for the benefit of others totaled approximately $ 189,000 and $ 715,000 at September 30, 2020 and December 31, 2019, respectively.

Leases serviced by First Bank Richmond for the benefit of others totaled approximately $ 22,000 and $ 86,000 at March 31, 2021 and December 31, 2020, respectively.

Additionally, certain leases have been sold with partial recourse.

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

At September 30, 2020 and December 31, 2019, First Bank Richmond has recorded a recourse obligation on leases sold with recourse of $ 0 , and has a maximum exposure of $ 411,000 for these leases.

The following table summarizes the future minimum lease payments receivable subsequent to September 30, 2020:

At March 31, 2021 and December 31, 2020, First Bank Richmond has recorded a recourse obligation on leases sold with recourse of $ 0 , and has a maximum exposure of $ 22,000 and $ 86,000 , respectively, for these leases.

The following table summarizes the future minimum lease payments receivable subsequent to March 31, 2021:

2021 $ 38,107

Thereafter 1,025

Fair Value of Financial Instruments

8 unchanged sentences

Recurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020 and December 31, 2019:

Fair Value Measurements Using

Quoted Prices

September 30, 2020

Value Quoted Prices

(Level 1) Significant

(Level 2) Significant

March 31, 2021

Available-for-sale securities

Treasury securities

SBA Pools $ 15,528 $ — $ 15,528 $ —

Federal agencies 7,533 — 7,533 —

State and municipal obligations 100,336 — 100,336 —

Mortgage-backed securities -

GSE residential

Mortgage-backed securities - GSE residential 134,749 — 134,749 —

Equity securities 13 13 — —

$ 258,159 $ 13 $ 258,146 $ —

Fair Value Measurements Using

Quoted Prices

Value Quoted Prices

(Level 1) Significant

(Level 2) Significant

December 31, 2020

Available-for-sale securities

Treasury securities

SBA Pools $ 16,300 $ — $ 16,300 $ —

Federal agencies 5,757 — 5,757 —

State and municipal obligations 96,285 — 96,285 —

Mortgage-backed securities -

GSE residential

Mortgage-backed securities - GSE residential 126,150 — 126,150 —

Equity securities 13 13 — —

$ 244,505 $ 13 $ 244,492 $ —

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

There have been no significant changes in the valuation techniques during the nine months ended September 30, 2020.

There have been no significant changes in the valuation techniques during the three months ended March 31, 2021.

Available-for-Sale Securities

2 unchanged sentences

Level 2 securities include agency securities, obligations of state and political subdivisions, and mortgage-backed securities.

Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other

benchmark quoted investment securities.

In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Nonrecurring Measurements

The following table presents the fair value measurement of assets and liabilities measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020 and December 31, 2019:

Fair Value Measurements Using

Quoted Prices

September 30, 2020

Value Quoted Prices

(Level 1) Significant

(Level 2) Significant

March 31, 2021

Impaired loans, collateral dependent $ 4,748 $ — $ — $ 4,748

23 unchanged sentences

Unobservable (Level 3) Inputs

The following tables present the fair value measurement of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020 and December 31, 2019:

Fair Value at

September 30,

Collateral-dependent

Marketability

impaired loans

Mortgage-servicing rights

Discount rate

Fair Value at

Collateral-dependent

Marketability

impaired loans

Mortgage-servicing rights

Discount rate

Fair Value at March 31, 2021 Valuation

Technique Unobservable

Collateral-dependent impaired loans $ 4,748 Appraisal Marketability discount 0 - 16 %

Mortgage-servicing rights $ 1,659 Discounted cash flow Discount rate 10 %

Fair Value at December 31, 2020 Valuation

Technique Unobservable

Collateral-dependent impaired loans $ 532 Appraisal Marketability discount 0 - 12 %

Mortgage-servicing rights $ 1,712 Discounted cash flow Discount rate 10 %

Fair Value of Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments at September 30, 2020 and December 31, 2019.

The following tables present estimated fair values of the Company’s financial instruments at March 31, 2021 and December 31, 2020:

Fair Value Measurements Using

Quoted Prices

September 30, 2020

Value Quoted Prices

(Level 1) Significant

(Level 2) Significant

March 31, 2021

Financial assets

6 unchanged sentences

Financial liabilities

Deposits 757,074 — 759,129 —

FHLB advances 170,000 — 177,192 —

1 unchanged sentence

Fair Value Measurements Using

Quoted Prices

Value Quoted Prices

(Level 1) Significant

(Level 2) Significant

December 31, 2020

7 unchanged sentences

Financial liabilities

Deposits 693,045 — 695,216 —

FHLB advances 170,000 — 178,015 —

5 unchanged sentences

The following table presents the computation of basic and diluted EPS for the periods indicated:

Three Months Ended

Nine Months Ended

September 30, 2020

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020

Net income $ 2,562 $ 2,452

Shares outstanding for Basic EPS:

Average shares outstanding 13,124,015 13,526,625

average restricted stock award shares not vested 431,501 —

average unearned ESOP Shares 1,005,311 1,059,419

4 unchanged sentences

Diluted Earnings Per Share $ 0.22 $ 0.20

For the Period

July 2, 2019 to

July 2, 2019 to September 30, 2019

September 30, 2019

Net income (loss)

Shares outstanding for Basic EPS:

Average shares outstanding

average unearned ESOP Shares

Shares outstanding for Basic EPS

Additional Dilutive Shares

Shares outstanding for Diluted EPS

Basic Earnings (loss) Per Share

Diluted Earnings (loss) Per Share

Benefit Plans

The Company has a retirement savings 401(k) plan, in which substantially all employees may participate.

The Company matches employees' contributions at the rate of 50 percent for the first six percent of base salary contributed by participants.

The Company’s expense for the plan was $ 52,000 and $ 49,000 for the three months ended March 31, 2021 and 2020, respectively.

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

As previously disclosed, the Company has frozen and intends to terminate the Bank’s participation in the DB Plan, which will require it to pay an amount based on the underfunded status of the plan.

As of March 31, 2021 the Company has accrued $ 17.5 million for this expense.

The actual termination expense of the DB Plan may be higher or lower than the amount currently accrued for by the Company depending on a number of factors, including but not limited to the interest rate environment and the valuation of plan assets.

Due to the current low interest rate environment, terminating the DB Plan at this time would require the Company to incur a substantial additional expense over and above the amount presently accrued.

As a result, the Company’s Board of Directors will continue to monitor and evaluate the timing of, and costs associated with, termination of the DB Plan.

Any additional expenses associated with the termination of the DB Plan will negatively impact our results of operations in the future.

Employee Stock Ownership Plan

As part of the corporate reorganization and related stock offering, the Company established an Employee Stock Ownership Plan (ESOP) covering substantially all employees.

The ESOP acquired 1,082,130 shares of Company common stock at an average of $13.59 per share on the open market with funds provided by a loan from the Company.

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

As part of the reorganization and related stock offering, the Company established an Employee Stock Ownership Plan, or ESOP, covering substantially all employees.

The ESOP acquired 1,082,130 shares of Company common stock at an average price of $ 13.59 per share on the open market with funds provided by a loan from the Company.

Dividends on unallocated shares used to repay the loan for the Company are recorded as a reduction of the loan or accrued interest, as applicable.

Dividends on allocated shares paid to participants are reported as compensation expense.

Unearned ESOP shares which have not yet been allocated to ESOP participants are excluded from the computation of average shares outstanding for earnings per share calculation.

Accordingly, $ 13,479,847 and $ 13,664,373 of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity at March 31, 2021 and December 31, 2020, respectively.

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

ESOP expense for the three months ended September 30, 2020 and 2019 was $151,548 and $121,000, respectively.

ESOP expense for the nine months ended September 30, 2020 was $481,000 and $121,000, respectively.

September 30, 2020

September 30, 2019

ESOP expense for the three months ended March 31, 2021 and 2020 was $ 183,000 and $ 187,000 , respectively.

March 31, 2021 March 31, 2020

Earned ESOP shares 90,196 22,545

4 unchanged sentences

Fair value of unearned shares $ 13,451 $ 10,829

Benefit Plans

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

As previously disclosed, the Company has frozen and intends to terminate the Bank’s participation in the DB Plan, which will require it to pay an amount based on the underfunded status of the plan.

As of September 30, 2020, the Company has accrued $17.5 million for this expense.

Due to the current low interest rate environment, terminating the DB Plan at this time would require the Company to incur a substantial additional expense, in the range of approximately $8.0 million to $10.0 million, over and above the amount presently accrued.

As a result, the Company’s Board of Directors will continue to monitor and evaluate the timing of, and costs associated with, termination of the DB Plan.

Any additional expenses associated with the termination of the DB Plan will negatively impact our results of operations in the future.

Richmond Mutual Bancorporation, Inc.

2020 Equity Incentive Plan

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

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

Restricted Stock Awards .

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

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

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

Total compensation cost recognized in the income statement for restricted stock awards during the three months ended March 31, 2021 was $ 303,000 and the related tax benefit recognized was $ 64,000 .

As of March 31, 2021, unrecognized compensation expense related to restricted stock awards was $ 4.0 million.

Stock Option Plan.

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

grant, to eligible participants.

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

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

The following table summarizes the stock option activity in the 2020 EIP during the three months ended March 31, 2021.

March 31, 2021

Number of Shares Weighted-Average Exercise Price

Balance at beginning of year 1,095,657 $ 10.53

Exercised — —

Forfeited/expired — —

Balance at end of year 1,095,657 10.53

Exercisable at end of period (1)

40,580 $ 10.53

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

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

Shares Weighted Average Grant Date Fair Value

Non-vested, beginning of year 1,055,077 $ 2.91

Forfeited — —

Non-vested, March 31 1,055,077 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements during 2020 was $ 205,000 and the related tax benefit recognized was $ 23,000 .

As of March 31, 2021, unrecognized compensation expense related to the stock option awards was $ 2.7 million.

Subsequent Event

Subsequent to September 30, 2020, the Company completed its previously announced stock repurchase program, repurchasing the remaining 94,232 shares at an average price of $11.07 per share.

On October 21, 2020, the Board of Directors of the Company authorized a second stock repurchase program for up to 664,969 shares, or approximately 5%, of its outstanding shares.

Subsequent to March 31, 2021 through May 14, 2021 the Company purchased 167,193 shares under the existing stock repurchase program, leaving 249,392 shares available for future repurchase.

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-Q

Item 1. Financial Statements