What changed in this filing

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Item 1. Financial Statements

2022-05-13 compared with 2021-11-12 · 144 added, 252 removed, 698 unchanged (36% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2022 December 31,

20 unchanged sentences

Interest payable 289,840 258,032

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

Other liabilities 6,398,208 6,193,944

4 unchanged sentences

Authorized - 90,000,000 shares

Issued and outstanding - 12,432,184 shares and 13,193,760 shares at September 30, 2021 and December 31, 2020, respectively

Issued and outstanding - 12,310,004 shares and 12,400,195 shares at March 31, 2022 and December 31, 2021, respectively

123,100 124,002

2 unchanged sentences

Unearned employee stock ownership plan (ESOP) ( 12,744,530 ) ( 12,928,359 )

Accumulated other comprehensive (loss) income ( 1,265,712 ) 3,708,605

Accumulated other comprehensive loss ( 25,336,767 ) ( 1,212,011 )

Total stockholders' equity 157,342,715 180,481,335

3 unchanged sentences

Condensed Consolidated Statements of Income

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Interest Income

14 unchanged sentences

Loan and lease servicing fees 27,868 ( 105,450 )

Net gains on securities (includes $ 17,887 , $ 117,304 , $ 55,799 , and $ 196,317 , respectively, related to accumulated other comprehensive income reclassifications)

17,887 117,304 55,799 196,317

Net gains on loan and lease sales 242,986 964,817

24 unchanged sentences

Richmond Mutual Bancorporation, Inc.

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net Income $ 3,017,592 $ 2,562,486

Other Comprehensive Income (Loss)

Unrealized (loss) gain on available-for-sale securities, net of tax (benefit) expense of $( 774,714 ), $ 45,101 , $( 1,310,569 ), and $ 1,040,994 , respectively.

( 2,914,399 ) 169,667 ( 4,930,236 ) 3,916,120

reclassification adjustment for realized gains included in net income, net of tax expense of $ 3,756 , $ 24,634 , $ 11,718 , and $ 41,226 , respectively.

Other Comprehensive Loss

Unrealized loss on available-for-sale securities, net of tax benefit of $ 6,412,910 , and $ 972,966 , respectively.

( 24,124,756 ) ( 3,660,206 )

Comprehensive Income $ 153,745 $ 2,608,550 $ 3,451,791 $ 11,250,906

Comprehensive Loss $ ( 21,107,164 ) $ ( 1,097,720 )

See Notes to Condensed Consolidated Statements.

7 unchanged sentences

Outstanding Amount

Balances, June 30, 2021 12,684,977 $ 126,850 $ 118,118,524 $ 75,957,135 $ ( 13,296,017 ) $ 1,662,818 $ 182,569,310

Balances, December 31, 2021 12,400,195 $ 124,002 $ 114,339,810 $ 80,157,893 $ ( 12,928,359 ) $ ( 1,212,011 ) $ 180,481,335

Net income — — — 3,017,592 — — 3,017,592

2 unchanged sentences

Stock based compensation — — 379,421 — — — 379,421

Exercise of stock options 12,116 121 127,460 — — — 127,581

Common stock dividends ($ 0.10 per share)

1 unchanged sentence

Repurchase of common stock ( 90,191 ) ( 902 ) ( 1,498,106 ) — — — ( 1,499,008 )

Balances, September 30, 2021 12,432,184 $ 124,322 $ 114,653,448 $ 78,237,829 $ ( 13,112,188 ) $ ( 1,265,712 ) $ 178,637,699

Balances, March 31, 2022 12,310,004 $ 123,100 $ 113,263,417 $ 82,037,495 $ ( 12,744,530 ) $ ( 25,336,767 ) $ 157,342,715

Common Stock Additional

3 unchanged sentences

Comprehensive

Income/(Loss) Total

Outstanding Amount

3 unchanged sentences

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

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

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

Exercise of stock options 12,116 121 127,460 — — — 127,581

Common stock dividends ($ 0.07 per share)

— — — ( 846,947 ) — — ( 846,947 )

Common stock dividends ($ 0.50 per share)

— — — ( 6,001,447 ) — — ( 6,001,447 )

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

Balances, September 30, 2021 12,432,184 $ 124,322 $ 114,653,448 $ 78,237,829 $ ( 13,112,188 ) $ ( 1,265,712 ) $ 178,637,699

Common Stock Additional

Capital Retained

Earnings Unearned

Shares Accumulated

Comprehensive

Outstanding Amount

Balances, June 30, 2020 13,526,625 $ 135,266 $ 132,563,670 $ 74,446,405 $ ( 14,032,728 ) $ 3,023,289 $ 196,135,902

Net income — — — 2,531,553 — — 2,531,553

Other comprehensive income — — — — — 76,997 76,997

ESOP shares earned — — ( 32,281 ) — 183,828 — 151,547

Common stock dividends ($ 0.05 per share)

— — — ( 605,081 ) — — ( 605,081 )

Repurchase of common stock ( 582,079 ) ( 5,821 ) ( 6,610,672 ) — — — ( 6,616,493 )

Balances, September 30, 2020 12,944,546 $ 129,445 $ 125,920,717 $ 76,372,877 $ ( 13,848,900 ) $ 3,100,286 $ 191,674,425

Common Stock Additional

Capital Retained

Earnings Unearned

Shares Accumulated

Comprehensive

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 — — — 7,489,876 — — 7,489,876

Other comprehensive income — — — — — 3,761,030 3,761,030

ESOP shares earned — — ( 70,487 ) — 551,486 — 480,999

Common stock dividends ($ 0.10 per share)

— — — ( 1,228,433 ) — — ( 1,228,433 )

Repurchase of common stock ( 582,079 ) ( 5,821 ) ( 6,610,672 ) — — — ( 6,616,493 )

Balances, September 30, 2020 12,944,546 $ 129,445 $ 125,920,717 $ 76,372,877 $ ( 13,848,900 ) $ 3,100,286 $ 191,674,425

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

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

6 unchanged sentences

Investment securities amortization, net 451,165 712,845

Investment securities gains ( 55,799 ) ( 196,317 )

Net gains on loan and lease sales ( 242,986 ) ( 964,817 )

11 unchanged sentences

Interest payable 31,808 ( 14,225 )

Net cash provided by operating activities 3,331,813 7,569,126

Net cash provided by (used in) operating activities 3,880,546 ( 2,435,728 )

Investing Activities

1 unchanged sentence

Proceeds from maturities and paydowns of securities available for sale 12,061,563 18,783,517

Proceeds from sales of securities available for sale 5,296,929 34,737,656

Proceeds from maturities and paydowns of securities held to maturity 891,488 2,010,016

2 unchanged sentences

Purchases of premises and equipment ( 63,778 ) ( 119,581 )

Purchase of FHLB stock ( 492,800 ) ( 1,569,200 )

Proceeds from sale of FHLB stock 211,500 —

Net cash used in investing activities ( 16,081,106 ) ( 42,095,471 )

7 unchanged sentences

Repurchase of common stock ( 1,499,008 ) ( 1,938,736 )

Proceeds from stock option exercises 127,581 —

Dividends paid ( 1,137,990 ) ( 846,947 )

11 unchanged sentences

Basis of Presentation

On July 1, 2019, Richmond Mutual Bancorporation, Inc., a Delaware corporation (“RMB-Delaware”), completed its reorganization from a mutual holding company form of organization to a stock form of organization (“corporate reorganization”).

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

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

Gross proceeds from the offering were $ 130.3 million.

In conjunction with the corporate reorganization, RMB-Maryland contributed 500,000 shares and $ 1.25 million of cash to a newly formed charitable foundation, First Bank Richmond, Inc.

Community Foundation (the “Foundation”).

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

In certain circumstances, where appropriate, the terms “Company”, “we”, “us” and “our” refer collectively to (i) RMB-Delaware and First Bank Richmond with respect to discussions in this document involving matters occurring prior to completion of the corporate reorganization and (ii) RMB-Maryland and First Bank Richmond with respect to discussions in this document involving matters occurring post-corporate reorganization, in each case unless the context indicates another meaning.

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

The accompanying financial information is unaudited and has been prepared from the consolidated financial statements of Richmond Mutual Bancorporation, Inc., and its wholly owned direct and indirect subsidiaries, First Bank Richmond and FB Richmond Holdings, Inc.

References in this document to Richmond Mutual Bancorporation refer to Richmond Mutual Bancorporation, Inc.

References to “we,” “us,” and “our” or the “Company” refers to Richmond Mutual Bancorporation and its wholly-owned direct and indirect subsidiaries, First Bank Richmond and FB Richmond Holdings, Inc., unless the context otherwise requires.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include information or note disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles.

14 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.

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.

Certain reclassifications have been made to the 2020 financial statements to conform to the 2021 financial statement presentation.

These reclassifications had no effect on net income.

Accounting Pronouncements

1 unchanged sentence

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").

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 U.S.

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

3 unchanged sentences

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

As of September 30, 2021, the Company had no loans outstanding that were modified under the CARES Act guidance.

As of March 31, 2022 the Company had no loans outstanding 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 PPP provides loans to eligible businesses through financial institutions like First Bank Richmond, 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 if the borrower's loan is not forgiven and is then not repaid by the member.

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 had originated approximately $ 103.1 million in PPP loans as of September 30, 2021, of which approximately $ 16.3 million were outstanding at September 30, 2021.

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

The Company originated approximately $ 38.2 million in PPP loans during 2021, of which approximately $ 6.0 million were outstanding at March 31, 2022.

The Jumpstart Our Business Startups Act (the "JOBS Act"), 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.

13 unchanged sentences

2019-05, “Financial Instruments-Credit Losses (Topic 326):

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.

Targeted Transition Relief”.

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.

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

2019-04 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.

1 unchanged sentence

As a result, ASU 2016-13 will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

The Company is evaluating its current expected loss methodology on the loan and investment portfolios to identify the necessary modifications in accordance with this standard.

The Company has not quantified the impact of these ASUs.

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

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.

The Company is evaluating its current expected credit loss ("CECL") methodology on the loan and investment portfolios to identify the necessary modifications in accordance with ASU 2016-13.

A CECL implementation team consisting of management from multiple areas of the Company have been involved in evaluating loss estimation methods and application of these methods to the specific segments and subsegments of the loan portfolio.

Management has been actively monitoring FASB developments and evaluating the use of the different methods allowed.

Due to continuing development of our methodology, additional time is required to quantify the effect of CECL on the Company's Consolidated Financial Statements.

The Company continues to refine its modeling and will finalize a method or methods of adoption in time for the effective date.

In March 2022 the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures .

The ASU eliminates the accounting guidance for troubled debt restructured loans (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Additionally, the ASU requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

This ASU will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, upon the Company’s adoption of the amendments in ASU 2016-13, which is commonly referred to as the current expected credit loss methodology.

In March 2020, the FASB issued ASU No.

4 unchanged sentences

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

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):

The Company does not expect the adoption of ASU No.

2020-04 to have a material impact on its consolidated financial statements.

In October 2020, the FASB issued ASU No.

2020-08, “Receivables – Nonrefundable Fees and Other Costs”.

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.

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

The adoption of ASU No.

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

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

ASU 2019-12 provides that state franchise or similar taxes that are based, at least in part on an entity’s income, be included in an entity’s income tax recognized as income-based taxes.

2019-12 provides that state franchise or similar taxes that are based, at least in part on an entity’s income, be included in an entity’s income tax recognized as income-based taxes.

The ASU further clarifies that the effect of any change in tax laws or rates used in the computation of the annual effective tax rate are required to be reflected in the first interim period that includes the enactment date of the legislation.

Technical changes to eliminate exceptions to Topic 740 related to intra-period tax allocations for entities with losses from continuing operations, deferred tax liabilities related to change in ownership of foreign entities, and interim-period tax allocations for businesses with losses where the losses are expected to be realized.

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

The amendments in ASU No.

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 adopted ASU No.

2019-12 on January 1, 2021.

The adoption of ASU No.

2019-12 did not have a material impact on the Company's 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 No.

2018-13 on January 1, 2020.

The adoption of ASU No.

2018-13 did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date:

(1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Under the new guidance, lessees are required to recognize the following for all leases, with the exception of short-term leases, at the commencement date:

(1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis;

and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Under the new guidance, lessor accounting is largely unchanged.

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

Based on leases outstanding as of December 31, 2020, the new standard will not have a material impact on the Company’s balance sheet or income statement.

In July 2018, the FASB issued ASU No.

2018-11, Leases (Topic 842), Targeted Improvements, which provide entities with an additional (and optional) transition method to adopt the new lease standard.

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

Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with current GAAP (Topic 842, Leases).

The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and certain criteria are met.

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

The Company adopted the amendments to ASU No.

2016-02 on January 1, 2022.

The adoption of the amendments did not have a material impact on the Company's consolidated financial statements.

Investment Securities

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

September 30, 2021

March 31, 2022

Available for sale

4 unchanged sentences

Corporate obligations 10,500 — 292 10,208

Equity securities 13 — — 13

358,907 71 32,143 326,835

9 unchanged sentences

Mortgage-backed securities - government-sponsored enterprises (GSE) residential 164,629 712 2,831 162,510

Corporate obligations 4,250 2 28 4,224

Equity securities 13 — — 13

4 unchanged sentences

Total investment securities $ 368,113 $ 3,151 $ 4,540 $ 366,724

The amortized cost and fair value of securities at September 30, 2021, by contractual maturity, are shown below.

The amortized cost and fair value of securities at March 31, 2022, 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.

7 unchanged sentences

Mortgage-backed securities –GSE residential 156,309 145,294 — —

Equity securities 13 13 — —

Totals $ 358,907 $ 326,835 $ 8,146 $ 8,167

Securities with a carrying value of $ 148,262,000 and $ 88,370,000 were pledged at September 30, 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 and nine months ended September 30, 2021 were $ 1,316,000 and $ 5,297,000 , respectively.

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

Gross gains were recognized on the sale of securities available-for-sale for the three and nine months ended September 30, 2021 and 2020 of $ 18,000 , $ 56,000 , $ 120,000 , and $ 255,000 , respectively.

There were no gross losses recognized on the sale of securities available for sale for the three and nine months ended September 30, 2021.

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

Securities with a carrying value of $ 120,074,000 and $ 136,463,000 were pledged at March 31, 2022 and December 31, 2021, respectively, to secure certain deposits and for other purposes as permitted or required by law.

There were no sales of securities available for sale for the three months ended March 31, 2022 and 2021.

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, 2021 and December 31, 2020 was $ 211,218,000 and $ 45,299,000 , respectively, which is approximately 57 % and 18 % 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, 2022 and December 31, 2021 was $ 315,723,000 and $ 223,842,000 , respectively, which is approximately 94 % and 61 % 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, 2021 and December 31, 2020:

Description of

Securities September 30, 2021

Securities March 31, 2022

Less Than 12 Months 12 Months or More Total

23 unchanged sentences

Mortgage-backed securities - GSE residential 111,104 2,576 6,523 255 117,627 2,831

Corporate obligations 2,972 28 — — 2,972 28

Total available-for-sale 205,875 4,003 17,546 535 223,421 4,538

2 unchanged sentences

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

Federal Agencies.

Federal Agency Obligations.

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

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.

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, 2021.

Mortgage-Backed Securities – GSE Residential and SBA Pools.

SBA Pools and Mortgage-Backed Securities - GSE Residential .

The unrealized losses on the Company’s investment in mortgage-backed securities and SBA pools were caused by interest rate changes and illiquidity.

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

Because the decline in fair 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, 2021.

State and Municipal Obligations.

State, Municipal, and Corporate Obligations.

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

The 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, 2021.

Loans, Leases and Allowance

The following table shows the composition of the loan and lease portfolio at September 30, 2021 and December 31, 2020:

September 30,

The following table shows the composition of the loan and lease portfolio at March 31, 2022 and December 31, 2021:

2022 December 31,

11 unchanged sentences

$ 849,987 $ 832,846

The following tables present the activity in the allowance for loan and lease losses for the three and nine months ended September 30, 2021 and 2020:

The following tables present the activity in the allowance for loan and lease losses for the three months ended March 31, 2022 and 2021:

Balance, beginning of period Provision (credit) for losses Charge-offs Recoveries Balance, end of period

Three Months Ended September 30, 2021:

Commercial mortgage $ 4,517 $ 156 $ ( 25 ) $ 7 $ 4,655

Commercial and industrial 1,951 ( 214 ) — 21 1,758

Construction and development 2,009 88 — — 2,097

Multi-family 1,353 273 — — 1,626

Residential mortgage 368 138 ( 80 ) 16 442

Home equity 23 5 — — 28

Leases 1,010 59 ( 31 ) 9 1,047

Consumer 200 ( 5 ) ( 8 ) 9 196

Total $ 11,431 $ 500 $ ( 144 ) $ 62 $ 11,849

Nine Months Ended September 30, 2021:

Three Months Ended March 31, 2022:

Commercial mortgage $ 4,742 $ ( 19 ) $ — $ 7 $ 4,730

8 unchanged sentences

Balance, beginning of period Provision (credit) for losses Charge-offs Recoveries Balance, end of period

Three Months Ended September 30, 2020:

Commercial mortgage $ 3,484 $ 699 $ — $ 10 $ 4,193

Commercial and industrial 1,815 265 — 23 2,103

Construction and development 871 53 — 1 925

Multi-family 840 229 — — 1,069

Residential mortgage 517 ( 94 ) — 17 440

Home equity 19 2 — — 21

Leases 838 93 ( 110 ) 70 891

Consumer 137 53 ( 26 ) 3 167

Total $ 8,521 $ 1,300 $ ( 136 ) $ 124 $ 9,809

Nine Months Ended September 30, 2020:

Three Months Ended March 31, 2021:

Commercial mortgage $ 4,628 $ ( 208 ) $ — $ 6 $ 4,426

7 unchanged sentences

Total $ 10,586 $ 400 $ ( 205 ) $ 178 $ 10,959

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, 2021 and December 31, 2020:

Allowance for loan and lease losses:

Loans and leases:

Individually evaluated for impairment Collectively evaluated for impairment Balance, September 30 Individually evaluated for impairment Collectively evaluated for impairment Balance, September 30

As of September 30, 2021:

Individually evaluated for impairment Collectively evaluated for impairment Balance, March 31 Individually evaluated for impairment Collectively evaluated for impairment Balance, March 31

As of March 31, 2022:

Commercial mortgage $ — $ 4,730 $ 4,730 $ 116 $ 257,639 $ 257,755

60 unchanged sentences

No material changes have been made to the risk characteristics pertaining to the loan and lease portfolio contained in the Company's 2021 Form 10-K.

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, 2021 and December 31, 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, 2022 and December 31, 2021:

Pass Special Mention Substandard Doubtful Loss Total

As of September 30, 2021:

As of March 31, 2022:

Commercial mortgage $ 252,647 $ 4,992 $ 116 $ — $ — $ 257,755

18 unchanged sentences

Total $ 825,234 $ 12,222 $ 8,453 $ 42 $ — $ 845,951

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, 2021 and December 31, 2020:

September 30, 2021

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, 2022 and December 31, 2021:

March 31, 2022

Delinquent Loans and Leases Current Total

27 unchanged sentences

Totals $ 1,161 $ 961 $ 7,360 $ 9,482 $ 836,469 $ 845,951 $ 1,847

The following tables present the Company’s impaired loans and specific valuation allowance at September 30, 2021 and December 31, 2020:

September 30, 2021

The following tables present the Company’s impaired loans and specific valuation allowance at March 31, 2022 and December 31, 2021:

March 31, 2022

Balance Unpaid

25 unchanged sentences

Commercial and industrial $ 628 $ 658 $ 299

Construction and development 4,900 4,900 750

$ 5,528 $ 5,558 $ 1,049

2 unchanged sentences

Commercial and industrial 995 1,224 299

Construction and development 4,900 4,900 750

Residential mortgage 119 244 —

Total impaired loans $ 6,142 $ 6,567 $ 1,049

The following tables present the Company’s average investment in impaired loans and leases, and interest income recognized for the three and nine months ended September 30, 2021 and 2020:

The following tables present the Company’s average investment in impaired loans and leases, and interest income recognized for the three months ended March 31, 2022 and 2021:

Investment in

Loans and Leases Interest

Three Months Ended September 30, 2021:

Three Months Ended March 31, 2022:

Total impaired loans

6 unchanged sentences

Loans and Leases Interest

Nine Months Ended September 30, 2021:

Three Months Ended March 31, 2021:

Total impaired loans

4 unchanged sentences

Total impaired loans and leases $ 3,792 $ 12

Investment in

Loans and Leases Interest

Three Months Ended September 30, 2020:

Total impaired loans

Commercial mortgage $ 215 $ 5

Commercial and industrial 1,114 12

Residential mortgage 269 6

Total impaired loans and leases $ 1,598 $ 23

Investment in

Loans and Leases Interest

Nine Months Ended September 30, 2020:

Total impaired loans

Commercial mortgage $ 275 $ 10

Commercial and industrial 1,130 53

Residential mortgage 298 12

Total impaired loans and leases $ 1,703 $ 75

The following table presents the Company’s nonaccrual loans and leases at September 30, 2021 and December 31, 2020:

September 30,

The following table presents the Company’s nonaccrual loans and leases at March 31, 2022 and December 31, 2021:

2022 December 31,

4 unchanged sentences

$ 6,157 $ 6,184

During the three and nine months ended September 30, 2021 and 2020, there were no newly classified TDRs.

For the three and nine months ended September 30, 2021 and 2020, the Company recorded no charge-offs related to TDRs.

As of September 30, 2021 and December 31, 2020, TDRs had a related allowance of $ 51,000 and $ 52,000 , respectively.

During the three and nine months ended September 30, 2021, there were no TDRs for which there was a payment default within the first 12 months of the modification.

During the three months ended March 31, 2022 and 2021, there were no newly classified TDRs.

For the three months ended March 31, 2022 and 2021, the Company recorded no charge-offs related to TDRs.

As of March 31, 2022 and December 31, 2021, TDRs had a related allowance of $ 48,000 and $ 49,000 , respectively.

During the three months ended March 31, 2022, 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.

3 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, 2021, the Company had no loan and lease modifications outstanding related to the COVID-19 pandemic 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, 2021 and December 31, 2020, the balance of real estate owned included $ 0 and $ 32,000 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At September 30, 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 $ 326,000 and $ 283,000 , respectively.

As of March 31, 2022, the Company had no loan and lease modifications outstanding related to the COVID-19 pandemic in accordance with the CARES Act.

At March 31, 2022 and December 31, 2021, the balance of real estate owned included $ 86,000 and $ 27,000 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At March 31, 2022 and December 31, 2021, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceeds were in process was $ 885,000 and $ 885,000 , respectively.

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

September 30,

2022 December 31,

4 unchanged sentences

Net investment in direct finance leases $ 130,451 $ 126,762

Leases serviced by First Bank Richmond for the benefit of others totaled approximately $ 0 and $ 86,000 at September 30, 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 both September 30, 2021 and December 31, 2020, First Bank Richmond recorded a recourse obligation on leases sold of $ 0 , and had a maximum exposure of $ 0 and $ 86,000 , respectively, for these leases.

The following table summarizes the future minimum lease payments receivable subsequent to September 30, 2021:

There were no leases serviced by the Company for the benefit of others at March 31, 2022 and December 31, 2021.

Certain leases have been sold from time to time by the Company with partial recourse.

The Company estimates and records its obligation based upon historical loss percentages.

At both March 31, 2022 and December 31, 2021, the Company did not have any recorded recourse obligations on leases sold.

The following table summarizes the future minimum lease payments receivable subsequent to March 31, 2022:

2022 $ 41,326

10 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, 2021 and December 31, 2020:

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant

September 30, 2021

March 31, 2022

Available-for-sale securities

4 unchanged sentences

Corporate obligations 10,208 — 10,208 —

Equity securities 13 13 — —

$ 326,835 $ — $ 326,835 $ —

9 unchanged sentences

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

Corporate obligations 4,224 — 4,224 —

Equity securities 13 13 — —

1 unchanged sentence

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, 2021.

There have been no significant changes in the valuation techniques during the three months ended March 31, 2022.

Available-for-Sale Securities

5 unchanged sentences

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, 2021 and December 31, 2020:

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant

September 30, 2021

March 31, 2022

Impaired loans, collateral dependent $ 314 $ — $ — $ 314

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, 2021 and December 31, 2020:

Fair Value at September 30,

Fair Value at March 31,

2022 Valuation

8 unchanged sentences

Fair Value of Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments at September 30, 2021 and December 31, 2020:

The following tables present estimated fair values of the Company’s financial instruments at March 31, 2022 and December 31, 2021:

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant

September 30, 2021

March 31, 2022

Financial assets

32 unchanged sentences

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

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020

Net income $ 3,082 $ 2,532

Shares outstanding for Basic EPS:

Average shares outstanding 12,499,455 13,313,399

average restricted stock award shares not vested 348,395 —

average unearned ESOP Shares 978,260 1,032,367

Shares outstanding for Basic EPS 11,172,800 12,281,032

Additional Dilutive Shares 300,652 —

Shares outstanding for Diluted EPS 11,473,452 12,281,032

Basic Earnings Per Share $ 0.28 $ 0.21

Diluted Earnings Per Share $ 0.27 $ 0.21

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

Net income $ 3,018 $ 2,562

11 unchanged sentences

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 $ 49,000 , $ 165,000 , $ 50,000 , and $ 156,000 for the three and nine months ended September 30, 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.

The Company is in the process of terminating its participation in the Pentegra Defined Benefits Plan, which will require a payment of an amount based on the underfunded status of the plan, referred to

as a withdrawal liability.

In 2019, the Company estimated and accrued approximately $ 17.5 million for this withdrawal liability.

This estimated withdrawal liability was calculated by plan administrators based on an interest rate of 2.35 %, Pri-2012 mortality tables with white collar adjustments, and an assumed December 31, 2019 withdrawal date.

The Company’s actual termination expense will be based on the cost of purchasing annuities through an insurance company, and may be higher or lower depending on a number of factors, including the interest rate environment and the valuation of plan assets.

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 interest rates are even lower now than they were in 2019.

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, and it is currently uncertain when the termination of the DB Plan will be completed or what the actual costs of such termination will be.

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

We recorded ongoing expenses of $ 179,000 for the quarter ended September 30, 2021, in connection with the freezing of the DB Plan.

The Company’s expense for the plan was $ 53,000 and $ 52,000 for the three months ended March 31, 2022 and 2021, respectively.

Employee Stock Ownership Plan

4 unchanged sentences

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, $ 13,112,188 and $ 13,664,373 of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity at September 30, 2021 and December 31, 2020, respectively.

Accordingly, $ 12,744,530 and $ 12,928,359 of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity at March 31, 2022 and December 31, 2021, respectively.

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

ESOP expense for the three and nine months ended September 30, 2021 and 2020 was $ 207,000 , $ 581,000 , $ 152,000 , and $ 481,000 , respectively.

September 30,

ESOP expense for the three months ended March 31, 2022 and 2021 was $ 226,000 and $ 183,000 , respectively.

2022 December 31,

14 unchanged sentences

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

The following table summarizes the restricted stock awards activity in the 2020 EIP during the nine months ended September 30, 2021.

Nine Months Ended September 30, 2021

The following table summarizes the restricted stock awards activity in the 2020 EIP during the three months ended March 31, 2022.

Three Months Ended March 31, 2022

Number of Restricted Shares Weighted Average Grant Date Fair Value

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

Granted 4,000 13.86

Vested ( 87,106 ) 10.56

Forfeited — —

Non-vested, September 30 348,395 10.56

Total compensation cost recognized in the income statement for restricted stock awards during the three and nine months ended September 30, 2021 was $ 232,000 and $ 851,000 , respectively, and the related tax benefit recognized was $ 49,000 and $ 179,000 , respectively.

As of September 30, 2021, unrecognized compensation expense related to restricted stock awards was $ 3.4 million.

Non-vested, March 31, 2022 348,395 10.56

Total compensation cost recognized in the income statement for restricted stock awards during the three months ended March 31, 2022 was $ 226,000 , and the related tax benefit recognized was $ 48,000 .

As of March 31, 2022, unrecognized compensation expense related to restricted stock awards was $ 3.0 million.

Stock Option Plan.

3 unchanged sentences

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 nine months ended September 30, 2021.

Nine Months Ended September 30, 2021

The following table summarizes the stock option activity in the 2020 EIP during the three months ended March 31, 2022.

Three Months Ended March 31, 2022

Number of Shares Weighted-Average Exercise Price

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

Granted 8,000 13.86

Exercised — —

Forfeited/expired — —

Balance, September 30 1,091,541 10.55

Balance, March 31, 2022 1,050,961 10.56

Exercisable at end of period 200,503 $ 10.56

5 unchanged sentences

Expected life of options 6.1 years

A summary of the status of the Company stock option shares as of September 30, 2021 is presented below.

A summary of the status of the Company stock option shares as of March 31, 2022 is presented below.

Shares Weighted Average Grant Date Fair Value

Non-vested, beginning of year 850,458 $ 2.91

Vested ( 212,619 ) 2.91

Granted 8,000 3.02

Forfeited — —

Non-vested, September 30 850,458 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements for the three and nine months ended September 30, 2021 was $ 156,000 and $ 572,000 , respectively, and the related tax benefit recognized was $ 17,000 and $ 63,000 , respectively.

As of September 30, 2021, unrecognized compensation expense related to the stock option awards was $ 2.3 million.

Non-vested, March 31, 2022 850,458 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements for the three months ended March 31, 2022 was $ 153,000 , and the related tax benefit recognized was $ 17,000 .

As of March 31, 2022, unrecognized compensation expense related to the stock option awards was $ 2.0 million.

Subsequent Event

Subsequent to September 30, 2021 through November 12, 2021 the Company purchased 21,651 shares of the Company's common stock pursuant to the existing stock repurchase program, leaving 1,023,847 shares available for future repurchase.

Subsequent to March 31, 2022 through May 13, 2022 the Company purchased 355,348 shares of the Company's common stock pursuant to the existing stock repurchase program, leaving 554,014 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