Richmond Mutual Bancorporation, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm Shareholders, Board of Directors, and Audit Committee Richmond Mutual Bancorporation, Inc. Richmond, Indiana Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Richmond Mutual Bancorporation, Inc. (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses on Loans and Leases – Qualitative Adjustments As described in Note 5 to the consolidated financial statements, the Company’s allowance for credit losses on loans and leases (ACL) was approximately $15,791,000 as of December 31, 2024. The ACL is established for current expected credit losses on the Company's loan and lease portfolios. 63 The Company estimates expected future losses for the loan's entire contractual term, taking into account expected payments when appropriate. The ACL is an estimation based on management's evaluation of expected losses related to the Company's financial assets measured at amortized cost. It considers relevant available information from internal and external sources relating to the historical loss experience, current conditions and reasonable and supportable forecasts for the Company's outstanding loan and lease balances. The Company utilizes a cash flow analysis method of estimating expected losses, which relies on key inputs and assumptions. Significant factors affecting the calculation are the segmenting of loans and leases based upon similar risk characteristics, applied loss rates based upon reasonable and supportable forecasts, and contractual term adjustments, including prepayment and curtailment adjustments. To ensure the ACL is maintained at an adequate level, a detailed analysis is performed on a quarterly basis, with an appropriate provision made to adjust the ACL. Qualitative adjustments are applied to each collectively segmented pool to appropriately capture differences in current or expected qualitative risk characteristics. We identified the qualitative adjustments component of the ACL as a critical audit matter. The qualitative adjustments component involves a high degree of auditor subjectivity in evaluating management’s estimates, such as evaluating management’s assessment of economic conditions and other external factors used to determine the qualitative adjustments. How We Addressed the Matter in Our Audit The primary procedures we performed to address this critical audit matter included: • Gaining an understanding of controls over the qualitative adjustments used in the ACL calculation including controls addressing the: • Determination of qualitative adjustments for each loan and lease segment. • Completeness and accuracy of the inputs to the qualitative adjustments applied to each loan and lease segment in the ACL calculation. • Substantively testing management's determination of the qualitative adjustments used in the ACL calculation, including: • Testing management’s process for developing the qualitative adjustments, which included assessing the relevance and reliability of data used to develop the qualitative adjustments, and included evaluating management’s judgments and assumptions for reasonableness. Among other procedures, our evaluation considered evidence from internal and external sources. • Performing a qualitative factor sensitivity analysis. • Evaluating the qualitative adjustments for directional consistency, testing the qualitative adjustments for reasonableness, and obtaining evidence for significant changes. • Testing the mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation. /s/ FORVIS MAZARS, LLP Forvis Mazars, LLP We have served as the Company’s auditor since at least 1982; however, an earlier year cannot be determined. Indianapolis, Indiana March 27, 2025 64 Richmond Mutual Bancorporation, Inc. Consolidated Balance Sheets December 31, 2024 and 2023 December 31, 2024 December 31, 2023 Assets Cash and due from banks $ 8,986,540 $ 8,578,489 Interest-bearing demand deposits 12,770,650 11,661,636 Cash and cash equivalents 21,757,190 20,240,125 Interest-bearing time deposits 300,000 — Investment securities - available for sale 258,191,630 282,688,326 Investment securities - held to maturity 3,497,913 4,949,530 Loans held for sale 1,092,920 793,500 Loans and leases, net of allowance for credit losses of $ 15,790,885 and $ 15,663,153 , respectively 1,158,879,008 1,090,073,198 Premises and equipment, net 12,922,028 13,311,892 Federal Home Loan Bank stock 13,907,100 12,647,100 Interest receivable 6,030,000 5,843,705 Mortgage-servicing rights 1,950,504 1,945,367 Cash surrender value of life insurance 3,856,494 3,764,929 Other assets 22,490,073 24,766,129 Total assets $ 1,504,874,860 $ 1,461,023,801 Liabilities Noninterest-bearing deposits $ 110,105,973 $ 114,376,777 Interest-bearing deposits 983,833,884 926,763,134 Total deposits 1,093,939,857 1,041,139,911 Federal Home Loan Bank advances 265,000,000 271,000,000 Advances by borrowers for taxes and insurance 590,439 588,371 Interest payable 4,831,674 4,396,952 Other liabilities 7,641,130 9,038,991 Total liabilities 1,372,003,100 1,326,164,225 Commitments and Contingent Liabilities — — Stockholders' Equity Common stock, $ 0.01 par value Authorized - 90,000,000 shares Issued and outstanding - 10,814,960 shares and 11,208,500 shares at December 31, 2024 and 2023, respectively 108,150 112,085 Additional paid-in capital 97,709,231 101,347,566 Retained earnings 91,582,986 87,902,747 Unearned employee stock ownership plan (ESOP) ( 10,722,410 ) ( 11,457,726 ) Accumulated other comprehensive loss ( 45,806,197 ) ( 43,045,096 ) Total stockholders' equity 132,871,760 134,859,576 Total liabilities and stockholders' equity $ 1,504,874,860 $ 1,461,023,801 See Notes to Consolidated Financial Statements 65 Richmond Mutual Bancorporation, Inc. Consolidated Statements of Income Years Ended December 31, 2024 and 2023 2024 2023 Interest Income Loans and leases $ 71,596,350 $ 58,793,495 Investment securities 8,103,183 8,054,095 Other 826,661 562,323 Total interest income 80,526,194 67,409,913 Interest Expense Deposits 31,750,966 22,809,866 Borrowings 10,068,067 6,937,656 Total interest expense 41,819,033 29,747,522 Net Interest Income 38,707,161 37,662,391 Provision for credit losses 550,265 531,974 Net Interest Income After Provision for Credit Losses 38,156,896 37,130,417 Non-interest Income Service charges on deposit accounts 1,238,661 1,115,079 Card fee income 1,236,692 1,258,718 Loan and lease servicing fees, including mortgage servicing right impairment 463,337 448,027 Net loss on securities (includes $( 50,698 ) and $ 0 , respectively, related to accumulated other comprehensive loss reclassifications) ( 50,698 ) — Net gains on loan and lease sales 554,546 517,883 Other income 1,315,614 1,271,072 Total non-interest income 4,758,152 4,610,779 Non-interest Expenses Salaries and employee benefits 18,348,049 17,438,599 Net occupancy expenses 1,354,982 1,333,625 Equipment expenses 926,548 1,127,770 Data processing fees 3,615,221 3,348,543 Deposit insurance expense 1,530,500 1,163,060 Printing and office supplies 170,282 163,339 Legal and professional fees 1,822,092 1,598,453 Advertising expense 377,787 385,471 Bank service charges 230,410 204,161 Real estate owned expense 22,653 58,759 Other expenses 3,652,828 3,916,699 Total non-interest expenses 32,051,352 30,738,479 Income Before Income Tax Expense 10,863,696 11,002,717 Provision for income taxes (includes $( 10,647 ) and $ 0 , respectively, related to income tax expense from reclassification of items) 1,486,348 1,515,881 Net Income $ 9,377,348 $ 9,486,836 Earnings Per Share Basic $ 0.93 $ 0.91 Diluted $ 0.92 $ 0.91 See Notes to Consolidated Financial Statements 66 Richmond Mutual Bancorporation, Inc. Consolidated Statements of Comprehensive Income Years Ended December 31, 2024 and 2023 2024 2023 Net Income $ 9,377,348 $ 9,486,836 Other Comprehensive (Loss) Income Unrealized (loss) gain on available-for-sale securities, net of tax benefit (expense) of $ 744,610 and $( 1,782,629 ), respectively ( 2,801,152 ) 6,706,079 Less: reclassification adjustment for realized losses included in net income, net of tax expense of $( 10,647 ) and $ 0 , respectively ( 40,051 ) — Total Other Comprehensive (Loss) Income ( 2,761,101 ) 6,706,079 Comprehensive Income $ 6,616,247 $ 16,192,915 See Notes to Consolidated Financial Statements 67 Richmond Mutual Bancorporation, Inc. Consolidated Statements of Stockholders’ Equity Years Ended December 31, 2024 and 2023 Common Stock Additional Paid-in Capital Retained Earnings Unearned ESOP Shares Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balances, December 31, 2022 11,784,246 $ 117,842 $ 106,088,897 $ 88,122,052 $ ( 12,193,043 ) $ ( 49,751,175 ) $ 132,384,573 Impact of ASU 2016-13 adoption — — — ( 3,785,168 ) — — ( 3,785,168 ) Balances, January 1, 2023 11,784,246 117,842 106,088,897 84,336,884 ( 12,193,043 ) ( 49,751,175 ) 128,599,405 Net income — — — 9,486,836 — — 9,486,836 Other comprehensive income, net of tax expense — — — — — 6,706,079 6,706,079 ESOP shares earned — — ( 123,772 ) — 735,317 — 611,545 Stock based compensation — — 1,627,203 — — — 1,627,203 Common stock dividends ($ 0.56 per share) — — — ( 5,920,973 ) — — ( 5,920,973 ) Repurchase of common stock ( 575,746 ) ( 5,757 ) ( 6,244,762 ) — — — ( 6,250,519 ) Balances, December 31, 2023 11,208,500 $ 112,085 $ 101,347,566 $ 87,902,747 $ ( 11,457,726 ) $ ( 43,045,096 ) $ 134,859,576 Net income — — — 9,377,348 — — 9,377,348 Other comprehensive loss, net of tax benefit — — — — — ( 2,761,101 ) ( 2,761,101 ) ESOP shares earned — — ( 74,344 ) — 735,316 — 660,972 Forfeiture of restricted stock awards ( 400 ) ( 4 ) 4 — — — — Stock based compensation — — 1,474,062 — — — 1,474,062 Exercise of stock options 1 1,952 20 ( 32 ) — — — ( 12 ) Common stock dividends ($ 0.56 per share) — — — ( 5,697,109 ) — — ( 5,697,109 ) Repurchase of common stock ( 395,092 ) ( 3,951 ) ( 5,038,025 ) — — — ( 5,041,976 ) Balances, December 31, 2024 10,814,960 $ 108,150 $ 97,709,231 $ 91,582,986 $ ( 10,722,410 ) $ ( 45,806,197 ) $ 132,871,760 See Notes to Consolidated Financial Statements 1 The amount shown represents the number of shares issued in net-settled option transactions where some shares are netted from a portion of the exercises. 68 Richmond Mutual Bancorporation, Inc. Consolidated Statements of Cash Flows Years Ended December 31, 2024 and 2023 2024 2023 Operating Activities Net income $ 9,377,348 $ 9,486,836 Adjustments to reconcile net income to net cash provided by operating activities Provision for credit losses 550,265 531,974 Depreciation and amortization 850,244 975,813 Deferred income tax 158,285 641,148 Stock based compensation 1,474,062 1,627,203 Investment securities amortization, net 943,315 1,136,167 Net loss on sale of investment securities available for sale 50,698 — Net gains on loan and lease sales ( 554,546 ) ( 517,883 ) Loss on sale of real estate owned 7,050 4,042 Gain on sale of premises and equipment ( 6,000 ) ( 1,800 ) Accretion of loan origination fees ( 767,469 ) ( 945,579 ) Amortization of mortgage-servicing rights 192,807 213,891 ESOP shares expense 660,972 611,545 Increase in cash surrender value of life insurance ( 91,565 ) ( 90,430 ) Loans originated for sale ( 26,266,889 ) ( 19,829,819 ) Proceeds on loans sold 26,566,309 20,149,619 Net change in Interest receivable ( 186,295 ) ( 1,133,224 ) Other assets 2,757,010 ( 1,986,401 ) Other liabilities ( 1,397,861 ) ( 1,786,506 ) Interest payable 434,722 3,027,601 Net cash provided by operating activities 14,752,462 12,114,197 Investing Activities Net change in interest-bearing time deposits ( 300,000 ) 490,000 Purchases of securities available for sale ( 7,501,450 ) ( 11,242,380 ) Proceeds from maturities and paydowns of securities available for sale 20,603,526 20,810,919 Proceeds from sales of securities available for sale 6,907,932 — Proceeds from maturities and paydowns of securities held to maturity 1,449,228 1,718,044 Net change in loans ( 68,868,279 ) ( 131,955,234 ) Proceeds from sales of real estate owned 125,109 963,871 Purchases of premises and equipment ( 460,380 ) ( 619,209 ) Proceeds from sale of premises and equipment 6,000 1,800 Purchases of FHLB stock ( 1,260,000 ) ( 2,699,800 ) Net cash used in investing activities ( 49,298,314 ) ( 122,531,989 ) Financing Activities Net change in Demand and savings deposits 23,730,746 ( 21,513,087 ) Certificates of deposit 29,069,200 57,392,228 Advances by borrowers for taxes and insurance 2,068 28,175 Proceeds from FHLB advances 288,500,000 541,500,000 Repayment of FHLB advances ( 294,500,000 ) ( 450,500,000 ) Repurchase of common stock ( 5,041,976 ) ( 6,250,519 ) Proceeds from stock option exercises ( 12 ) — Dividends paid ( 5,697,109 ) ( 5,920,973 ) Net cash provided by financing activities 36,062,917 114,735,824 Net Change in Cash and Cash Equivalents 1,517,065 4,318,032 Cash and Cash Equivalents, Beginning of Period 20,240,125 15,922,093 Cash and Cash Equivalents, End of Period $ 21,757,190 $ 20,240,125 Additional Cash Flows and Supplementary Information Interest paid $ 41,384,311 $ 26,719,921 Income tax paid ( 406,837 ) 2,050,000 Transfers from loans to other real estate owned 37,435 1,053,040 See Notes to Consolidated Financial Statements 69 Richmond Mutual Bancorporation, Inc. Notes to Consolidated Financial Statements December 31, 2024 and 2023 (Table Dollar Amounts in Thousands, Except Per Share Amounts) Note 1: Nature of Operations and Summary of Significant Accounting Policies 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” or “First Bank”), was succeeded by Richmond Mutual Bancorporation, Inc., a new Maryland corporation (the "Company”). As part of the corporate reorganization, First Mutual of Richmond, Inc.’s (the “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, the Company 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 the MHC’s ownership interest in the retained earnings of RMB-Delaware as of December 31, 2017 and March 31, 2019. First Bank, headquartered in Richmond, Indiana, is a state-chartered commercial bank. Established in 1887 as a mutual savings and loan, it became a federal mutual savings and loan in 1935, operating as First Federal Savings and Loan Association of Richmond. In 1993, the Bank operated as First Bank Richmond, S. B. after converting to a state-chartered mutual savings bank. It transitioned to a national bank charter in 1998 as part of a mutual holding company reorganization. In 2007, its holding company, Richmond Mutual Bancorporation-Delaware, acquired Mutual Federal Savings Bank in Sidney, Ohio. Mutual Federal operated independently until 2016, when it merged with First Bank Richmond to streamline operations. In 2017, the Bank converted to an Indiana state-chartered commercial bank and adopted the name First Bank Richmond, while continuing to operate in Ohio under the name Mutual Federal, a division of First Bank Richmond. First Bank generates commercial, mortgage and consumer loans and leases, and receives deposits from customers located primarily in Wayne and Shelby Counties in Indiana, and Shelby, Miami, and Franklin Counties in Ohio. First Bank’s loans and leases are generally secured by specific items of collateral including real property, consumer assets and business assets. When the word "loan" or "loans" is used in these financial statements it includes leases, unless the context indicates otherwise. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses. Consolidation - The consolidated financial statements include the accounts of the Company and First Bank and their direct and indirect subsidiaries after elimination of all material intercompany transactions. Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Securities held to maturity are carried at amortized cost. Debt securities not classified as held to maturity or not classified as trading are classified as available for sale. 70 Debt securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income (loss), net of tax. Equity securities are carried at fair value with changes in unrealized gains and losses recognized through net income. Trading account securities are held for resale in anticipation of short-term market movements and are valued at fair value. Gains and losses, both realized and unrealized, are included in other income. The Company accounts for recognition and presentation of impaired securities in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Code ("ASC") 326. When an impairment has occurred, it is determined whether or not the impairment is due to credit or non-credit related factors. If it is determined that the impairment is credit-related, then it must also be determined if the Company has the intent to sell the security or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of these factors are present, then the impairment will be recognized in earnings with a corresponding adjustment to the amortized cost basis of the security. If the Company does not intend to sell the security and it is more likely than not that the sale of the security will not be required before recovery of its amortized cost basis, the present values of expected cash flows to be collected from the security will be compared against the amortized cost basis of the security. If the amortized cost basis of the security is greater than the present cash flows expected, a credit loss would exist and it would determine the amount of allowance, if any, that would be deemed needed. A needed allowance would result in an allowance recognized on the balance sheet with a corresponding adjustment to earnings. Amortization of premiums and accretion of discounts are recorded as interest income from securities. Realized gains and losses are recorded as net security gains (losses). Gains and losses on sales of securities are determined on the specific-identification method. Purchased premiums and discounts on collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs) and other mortgage related securities are amortized or accreted using the effective interest method. The period of amortization used is estimated based on anticipated principal prepayments. Differences between anticipated and actual prepayments result in adjustments which are charged or credited to income as an adjustment to yield. For classification purposes, REMICs are grouped with mortgage-backed securities. Leases - Lease financing consists of direct financing leases. Direct financing leases are carried at cost. Cost is defined as the total minimum lease payments receivable and the estimated residual value of the leased property, less the amount of unearned income. Unearned income on direct financing leases is recognized as income over the term of the lease using a method that approximates the interest method. Loans - Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for credit losses on loans, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan. For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the contractual due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. For all loan portfolio segments except residential and consumer loans, the Company promptly charges off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on 71 information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For collateral dependent loans, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral. The Company charges off residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance, which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value, less costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 90 days past due, and charge down to the net realizable value when other secured loans are 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off. For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. Loans modified to borrowers experiencing financial difficulty recognize interest income on an accrual basis at the renegotiated rate or terms, provided the loan is in compliance with the modified terms. If determined that the modified loan or lease is less than the recorded investment in the loan, a charge-off is recognized to the allowance for credit losses on loans and leases. Allowance for Credit Losses - The allowance for credit losses is established for current expected credit losses on the Company's loan and lease portfolios in accordance with ASC Topic 326. Losses are estimated to have occurred through a provision for credit losses charged to income. Credit losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses is evaluated on a regular basis by management and is maintained at a level believed to be adequate to absorb expected credit losses within the Company's loan and lease portfolio. In evaluating the allowance, management considers all relevant information available, from internal and external sources relating to historical experience, current conditions, and reasonable and supportable forecasts. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of collectively pooled and individually evaluated components. "Collectively pooled" refers to loans and leases grouped based upon similar risk characteristics. Quantitative methodologies and qualitative adjustments are applied to each pooled segment. The Company has identified eight segments of loans and leases which are collectively pooled based on similar risk characteristics. The allowance for credit losses on pooled loans and leases is estimated based upon periodic review of the loan and lease portfolio. The Company utilizes a cash flow ("CF") model to estimate the portion of quantitative allowance reserve for collectively pooled loans and leases. CF models allow for effective incorporation of reasonable and supportable forecasts in a consistent manner. If inadequate information is available to perform CF modeling for a collective pool, the Company uses the Remaining Life Method ("RLM") as a substitute. The RLM uses periodic charge-off rates and applies those rates to the projected balances over the remaining life of the loan or lease. 72 Accrued interest receivable is excluded from the calculation of the allowance for credit losses, as the Company's policy is to write off accrued interest promptly when deemed uncollectible by reversing interest income. Key inputs into the CF model include loan and lease-level information, such as the amortized cost basis of individual loans and leases, prepayment and curtailment rates for the collective pool, and forecasted loss drivers. The Company uses prepayment and curtailment rates based upon studies done using internal historical information, or benchmarked rates from external sources when the Company's own historical data is not sufficient. When estimating for credit loss, the Company forecasts the first four quarters of the credit loss estimate and reverts to a long-run average of each considered factor. The Company develops its reasonable and supportable forecasts using economic data, such as gross domestic product and unemployment rate. For all collectively pooled segments, qualitative adjustments are applied to capture differences in current or expected qualitative risk characteristics. In assessing estimated credit losses, management considers any changes in the following factors and how they relate to the Company's current lending environment: (i) lending policies, procedures, and strategies, (ii) the nature and volume of the portfolio, (iii) international, national, regional, and local conditions, (iv) the experience, depth, and ability of lending management, (v) the volume and severity of past due loans, (vi) the quality of the loan and lease review system, (vii) the underlying collateral, (viii) concentration risk, and (ix) the effect of other external factors. Loans and leases with different risk characteristics are individually evaluated for potential credit losses and assigned individual reserves. These individually evaluated loans and leases are removed from the pools and are not included in the collective evaluation. Individually analyzed loans and leases may be identified due to current information and events, such as non-accrual status, delinquency status or history, or other potential identifiers impacting the collectability of the loan or lease. Individual reserves are determined at the loan- or lease-level based on an analysis of the expected future cash flows, the fair value of the collateral less costs to sell, or observable market value. Mortgage Loans Held for Sale – Mortgage loans originated and intended for sale in the secondary market are recorded at the lower of cost or fair value on an individual loan basis. Premises and Equipment - Premises and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method based principally on the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains and losses on dispositions are included in current operations. Federal Home Loan Bank (FHLB) stock - FHLB stock is a required investment for institutions that are members of the FHLB system. The required investment in the common stock is based on a predetermined formula, carried at cost and evaluated for impairment. Foreclosed Assets Held for Sale - Assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at fair value, less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value, less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net income or expense from foreclosed assets. Mortgage Servicing Rights - Mortgage servicing rights on originated loans that have been sold are initially recorded at fair value. Capitalized mortgage servicing rights, which include purchased servicing rights, are amortized in proportion to and over the period of estimated servicing revenues. Impairment of mortgage servicing rights is assessed based on the fair value of those rights. Fair values are estimated using discounted cash flows based on a current market interest rate. For purposes of measuring impairment, the rights are stratified based on the predominant risk characteristics of the underlying loans. The predominant characteristic currently used for stratification is type of loan. The amount of impairment recognized is the amount by which the capitalized mortgage servicing rights for a stratum exceed their fair value. 73 Low Income Housing Tax Credits (LIHTC) - The Company has invested in LIHTC through funds that assist corporations in investing in limited partnerships and limited liability companies that own, develop and operate low-income residential rental properties for purposes of qualifying for the LIHTC. These investments are accounted for under the proportional amortization method which recognizes the amortization of the investment in proportion to the tax credit and other tax benefits received. Long-lived Asset Impairment - The Company evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. No asset impairment was recognized during the years ended December 31, 2024 and 2023. Revenue Recognition - ASC 606, “Revenue from Contracts with Customers," provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance enumerates five steps that entities should follow in achieving this core principle. Revenue generated from financial instruments, including loans and investment securities, are not included in the scope of ASC 606. Revenue-gathering activities that are within the scope of ASC 606 and that are presented as non-interest income in the Company’s consolidated statements of income include: – Service charges on deposit accounts – these include general service fees charged for deposit account maintenance and activity and transaction-based fees charged for certain services, such as debit card, wire transfer and overdraft activities. Revenue is recognized when the performance obligation is completed, which is generally after a transaction is completed or monthly for account maintenance services. – Card fee income – this includes debit card fees charged based on the volume and number of debit card transactions. Revenue is recognized when the performance obligation is completed, which is generally after a transaction is completed or monthly for account maintenance services. Income Tax - Income tax in the consolidated statements of operations includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes. The Company files consolidated income tax returns with its parent and subsidiary. Uncertain Tax Positions - The Company has adopted the provisions of ASC 740, Income Taxes , concerning the accounting and disclosures for uncertain tax positions, previously deferred by ASC 740-10-65. As part of the implementation of this standard, management evaluated its current tax positions and determined the adoption of this standard had no material impact on the consolidated financial statements of the Company. Share Based Compensation - At December 31, 2024, the Company had share-based compensation plans, which are described more fully in Note 15. All share-based payments are to be recognized as expense, based upon their fair values, in the financial statements over the vesting period of the awards. The Company has recorded approximately $ 594,000 and $ 653,000 in compensation expense relating to vesting of stock options, which are recognized as they occur, for the years ended December 31, 2024 and 2023, respectively. The Company has recorded approximately $ 880,000 and $ 974,000 in compensation expense relating to the vesting restricted stock awards for the years ended December 31, 2024 and 2023, respectively. Advertising Expense - The Company's advertising costs are expensed as incurred. 74 Note 2: Accounting Pronouncements The Jumpstart Our Business Startups Act (the "JOBS Act"), enacted in April 2012, introduced various changes to federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company” ("EGC"). The Company previously qualified as and elected to be an EGC under the JOBS Act. As an EGC, the Company elected to comply with new or amended accounting pronouncements in the same manner as a private company, an election that had to be made when the Company first filed a registration statement and remained irrevocable while the Company maintained EGC status. However, the Company no longer qualifies as an EGC as of December 31, 2024, and going forward, it will be required to comply with new or amended accounting pronouncements applicable to public companies. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures , requiring public entities to disclose information about significant expenses for their reportable segments on both an interim and annual basis. Public entities must disclose significant expense categories and amounts for each reportable segment, which are derived from expenses regularly reported to the entity’s chief operating decision-maker (CODM) and included in the segment's reported measures of profit or loss. Additionally, public entities must disclose the title and position of the CODM and explain how the CODM uses these measures to assess segment performance. The ASU also mandates certain segment-related interim disclosures that were previously required only on an annual basis. The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted this ASU on January 1, 2024. Adoption of ASU No. 2023-07 did not have a material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU applies to contracts, hedging relationships and other transactions that reference the London Interbank Offer Rate ("LIBOR") or other rate references expected to be discontinued because of reference rate reform. The ASU permits an entity to make necessary modifications to eligible contracts or transactions without requiring contract remeasurement or reassessment of a previous accounting determination. In December of 2022, the FASB issued ASU No. 2022-06 which extended the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The guidance ensures the relief in Topic 848 covers the period of time during which a significant number of modifications may take place and the ASU defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. In March 2023, the FASB issued ASU No. 2023-02, Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method . This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. ASU No. 2023-02 is effective for all public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The Company adopted this guidance on January 1, 2024. Adoption of ASU 2023-02 did not have a material impact on the Company's consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU established new income tax disclosure requirements and modified existing requirements. The ASU requires additional information be disclosed for specified categories, and reconciling items that meet a certain threshold, within the rate reconciliation on an annual basis. Additionally, this ASU requires information be disclosed on the amount of income taxes paid (net of refunds), disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds) disaggregated by jurisdiction based on a quantitative threshold. ASU No. 2023-09 is effective for all public business entities for annual periods beginning after December 15, 2024. The ASU is effective for the Company beginning January 1, 2025. The Company does not expect the adoption of ASU No. 2023-09 to have a material impact on its consolidated financial statements. 75 Note 3: Restriction on Cash and Due From Banks At December 31, 2024, the Company’s cash accounts exceeded federally insured limits by approximately $ 29,755 . The Company’s cash balances with the Federal Reserve Bank and the Federal Home Loan Bank, which are not federally insured, totaled approximately $ 10,268,000 at December 31, 2024. The Federal Reserve Board announced on March 15, 2020 the reduction of the reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated the restriction on the Company's cash and cash equivalents for December 31, 2024. Note 4: Investment Securities The amortized cost and approximate fair values, together with gross unrealized gains and losses, of investment securities are as follows: 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale U.S. treasury securities $ 3,159 $ 2 $ — $ 3,161 SBA Pools 4,243 — 543 3,700 Federal agencies 15,000 — 1,666 13,334 State and municipal obligations 162,524 1 32,166 130,359 Mortgage-backed securities - government-sponsored enterprises (GSE) residential 119,748 5 21,440 98,313 Corporate obligations 11,500 — 2,175 9,325 316,174 8 57,990 258,192 Held to maturity State and municipal obligations 3,498 8 85 3,421 3,498 8 85 3,421 Total investment securities $ 319,672 $ 16 $ 58,075 $ 261,613 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale U.S. treasury securities $ 2,996 $ — $ 20 $ 2,976 SBA Pools 5,337 — 565 4,772 Federal agencies 15,000 — 1,847 13,153 State and municipal obligations 169,118 16 27,688 141,446 Mortgage-backed securities – government-sponsored enterprises (GSE) residential 133,223 62 21,804 111,481 Corporate obligations 11,500 — 2,640 8,860 337,174 78 54,564 282,688 Held to maturity State and municipal obligations 4,950 13 42 4,921 4,950 13 42 4,921 Total investment securities $ 342,124 $ 91 $ 54,606 $ 287,609 76 The amortized cost and fair value of investment securities at December 31, 2024, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Available for Sale Held to Maturity Amortized Cost Fair Value Amortized Cost Fair Value One year or less $ 5,033 $ 5,022 $ 470 $ 470 After one to five years 24,973 23,244 1,968 1,950 After five to ten years 41,543 36,574 450 442 After ten years 124,877 95,039 610 559 196,426 159,879 3,498 3,421 Mortgage-backed securities –GSE residential 119,748 98,313 — — Totals $ 316,174 $ 258,192 $ 3,498 $ 3,421 Investment securities with a carrying value of $ 109,909,000 and $ 162,430,000 were pledged at December 31, 2024 and 2023, respectively, to secure certain deposits and for other purposes as permitted or required by law. Proceeds from the sale of investment securities available for sale for the year ended December 31, 2024 were $ 6,908,000 . Gross losses recognized on the sale of investment securities available for sale for the year ended December 31, 2024 were $ 71,000 . Gross gains on the sale of investment securities available for sale were $ 20,000 for the year ended December 31, 2024. There were no sales of investment securities available for sale for the year ended December 31, 2023. Certain investments in debt securities are reported in the consolidated financial statements and notes at an amount less than their historical cost. Total fair value of these investments at December 31, 2024 and 2023 was $ 255,749,000 and $ 279,852,000 , respectively, which is approximately 98 % and 97 % of the fair value of the Company’s available for sale and held to maturity investment portfolio at those dates, respectively. These declines primarily resulted from changes in market interest rates since their purchase. The Company does not consider investment securities available for sale with unrealized losses to be experiencing credit losses at December 31, 2024 and 2023. Management considers it more likely than not that the Company will not be required to sell these investment securities before recovery of the amortized cost basis, which may be the maturity date of the securities. Investment securities held to maturity are financial assets measured at amortized cost. With the adoption of CECL, investment securities held to maturity are required to have an established allowance for credit losses that represents the portion of the amortized cost basis of a financial asset that is not expected to be collectable. The Company estimates expected credit losses on a collective basis by security type, with consideration given to historical information, credit ratings, and the statistical probability of future losses. The Company monitors the credit quality of investment securities held to maturity using credit ratings quarterly. As of December 31, 2024 and 2023, there was no allowance for credit losses recognized on the Company's investment securities held to maturity portfolio. 77 The following table summarizes the amortized cost of investment securities held to maturity by credit quality indicator as of December 31, 2024 and 2023: State and municipal obligations 2024 2023 AA+ $ 483 $ 1,262 AA- 295 585 A+ 605 815 BBB+ — 81 Not rated 2,115 2,207 $ 3,498 $ 4,950 Accrued interest receivable for held to maturity securities was $ 52,000 and $ 63,000 at December 31, 2024 and 2023, respectively. The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses. The following tables show the Company’s investments’ 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 December 31, 2024 and 2023: 2024 Less Than 12 Months 12 Months or More Total Description of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Available for sale SBA Pools $ 454 $ 1 $ 2,991 $ 542 $ 3,445 $ 543 Federal agencies — — 13,334 1,666 13,334 1,666 State and municipal obligations 1,578 17 127,705 32,149 129,283 32,166 Mortgage-backed securities – GSE residential 1,045 10 96,296 21,430 97,341 21,440 Corporate obligations — — 9,324 2,175 9,324 2,175 Total available-for-sale 3,077 28 249,650 57,962 252,727 57,990 Held to maturity State and municipal obligations 1,253 12 1,769 73 3,022 85 Total $ 4,330 $ 40 $ 251,419 $ 58,035 $ 255,749 $ 58,075 78 2023 Less Than 12 Months 12 Months or More Total Description of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Available for sale U.S. treasury securities $ 489 $ 4 $ 2,487 $ 16 $ 2,976 $ 20 SBA Pools 329 — 4,410 565 4,739 565 Federal agencies — — 13,153 1,847 13,153 1,847 State and municipal obligations 1,565 21 137,119 27,667 138,684 27,688 Mortgage-backed securities – GSE residential 3,458 139 104,581 21,665 108,039 21,804 Corporate obligations — — 8,860 2,640 8,860 2,640 Total available-for-sale 5,841 164 270,610 54,400 276,451 54,564 Held to maturity State and municipal obligations 849 3 2,552 39 3,401 42 Total $ 6,690 $ 167 $ 273,162 $ 54,439 $ 279,852 $ 54,606 Federal Agency Obligations and U.S. Treasury Securities The unrealized losses on the Company’s investments in direct obligations of U.S. federal agencies and treasury securities were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. SBA Pools and Mortgage-Backed Securities - GSE Residential The unrealized losses on the Company’s investment in SBA pools and mortgage-backed securities were caused by interest rate changes and illiquidity. The Company expects to recover the amortized cost basis over the term of the securities. The decline in market value is attributable to changes in interest rates and not credit quality. 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. State, Municipal, and Corporate Obligations The unrealized losses on the Company’s investments in securities of state, municipal, and corporate obligations were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. The Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. The Company expects the fair value of the securities as described above to recover as the securities approach their maturity or reset date. 79 Note 5: Loans, Leases and Allowance Categories of loans and leases at December 31, 2024 and 2023 include: 2024 2023 Commercial mortgage $ 371,705 $ 341,633 Commercial and industrial 126,367 115,428 Construction and development 132,570 157,805 Multi-family 185,864 138,757 Residential mortgage 172,644 162,123 Home equity lines of credit 16,826 10,904 Leases 148,102 156,598 Consumer 21,218 23,264 1,175,296 1,106,512 Less Allowance for credit losses 15,791 15,663 Deferred loan fees 626 776 $ 1,158,879 $ 1,090,073 First Bank rates all loans and leases by credit quality using the following designations: Grade 1 - Exceptional Exceptional loans are top-quality loans to individuals whose financial credentials are well known to the Company. These loans have excellent sources of repayment, are well documented and/or virtually free of risk (i.e., CD secured loans). Grade 2 - Quality Loans These loans have excellent sources of repayment with no identifiable risk of collection, and they conform in all respects to Company policy and Indiana Department of Financial Institutions ("DFI") and Federal Deposit Insurance Corporation ("FDIC") regulations. Documentation exceptions are minimal or are in the process of being corrected and are not of a type that could subsequently expose the Company to risk of loss. Grade 3 - Acceptable Loans This category is for “average” quality loans. These loans have adequate sources of repayment with little identifiable risk of collection and they conform to Company policy and DFI/FDIC regulations. Grade 4 - Acceptable but Monitored Loans in this category may have a greater than average risk due to financial weakness or uncertainty but do not appear to require classification as special mention or substandard loans. Loans rated “4” need to be monitored on a regular basis to ascertain that the reasons for placing them in this category do not advance or worsen. Grade 5 - Special Mention Loans in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. This special mention rating is 80 designed to identify a specific level of risk and concern about an asset’s quality. Although a special mention loan has a higher probability of default than a grade 1-4 or "pass" rated loan, its default is not imminent. Grade 6 - Substandard Loans in this category are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Substandard loans have a high probability of payment default, or they have other well-defined weaknesses. Such loans have a distinct potential for loss; however, an individual loan’s potential for loss does not have to be distinct for the loan to be rated substandard. The following are examples of situations that might cause a loan to be graded a “6”: • Cash flow deficiencies (losses) jeopardize future loan payments; • Sale of non-collateral assets has become a primary source of loan repayment; • The relationship has deteriorated to the point that sale of collateral is now the Company’s primary source of repayment, unless this was the original source of loan repayment; • The borrower is bankrupt or for any other reason future repayment is dependent on court action. Grade 7 - Doubtful A loan classified as doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable. A doubtful loan has a high probability of total or substantial loss. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Because of high probability of loss, nonaccrual accounting treatment will be required for doubtful loans. Grade 8 - Loss Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets are not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan even though partial recovery may be affected in the future. The risk characteristics of each loan portfolio segment are as follows: Commercial and Industrial Commercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. 81 Commercial Mortgage including Construction and Development Loans in this segment include commercial loans, commercial construction loans, and multi-family loans. This segment also includes loans secured by 1-4 family residences which were made for investment purposes. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company’s commercial real estate portfolio are diverse, but with geographic location almost entirely in the Company’s market area. 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 addition, management tracks the level of owner-occupied commercial real estate versus nonowner-occupied loans. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews and financial analysis of the developers and property owners. Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing. Residential, Home Equity, and Consumer Residential, home equity, and consumer loans consist of three segments - residential mortgage loans, including brokered mortgage loans, home equity lines of credit, and personal loans. 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. Home equity loans are typically secured by a subordinate interest in 1-4 family residences. Consumer personal loans are secured by consumer personal assets, such as automobiles or recreational vehicles. Some consumer personal loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. Leases Lease financing consists of direct financing leases and are used by commercial customers to finance capital purchases of equipment. The credit decisions for these transactions are based upon an assessment of the overall financial capacity of the applicant. 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 portfolio based on rating category, payment activity, and origination year as of December 31, 2024 and 2023: 82 2024 2023 2022 2021 2020 Prior Revolving loans amortized cost basis Total As of December 31, 2024: Commercial mortgage Pass $ 22,469 $ 40,634 $ 82,254 $ 65,852 $ 31,382 $ 90,763 $ 33,393 $ 366,747 Substandard — — — 234 4,724 — — 4,958 Total Commercial mortgage 22,469 40,634 82,254 66,086 36,106 90,763 33,393 371,705 Current period gross charge-offs — — — — — — — — Commercial and industrial Pass 18,197 28,998 9,866 11,111 2,703 9,648 44,026 124,549 Substandard — — 282 — — 35 1,501 1,818 Total Commercial and industrial 18,197 28,998 10,148 11,111 2,703 9,683 45,527 126,367 Current period gross charge-offs — — — — — 16 — 16 Construction and development Pass 20,811 44,837 43,691 18,185 30 116 — 127,670 Substandard — — — — — 4,900 — 4,900 Total Construction and development 20,811 44,837 43,691 18,185 30 5,016 — 132,570 Current period gross charge-offs — — — — — — — — Multi-family Pass 7,252 3,789 61,936 50,178 6,195 24,845 26,751 180,946 Special Mention — — — 1,461 3,457 — — 4,918 Total Multi-family 7,252 3,789 61,936 51,639 9,652 24,845 26,751 185,864 Current period gross charge-offs — — — — — — — — Residential mortgage Pass 22,614 33,949 28,498 28,302 16,239 39,174 2,513 171,289 Substandard — 35 — 450 — 870 — 1,355 Total Residential mortgage 22,614 33,984 28,498 28,752 16,239 40,044 2,513 172,644 Current period gross charge-offs — — — — — 10 — 10 Home equity lines of credit Pass 18 198 — 57 — — 16,539 16,812 Substandard — — — — — — 14 14 Total Home equity lines of credit 18 198 — 57 — — 16,553 16,826 Current period gross charge-offs — — — — — — — — Direct financing leases Pass 53,286 53,601 25,447 11,381 3,336 329 — 147,380 Substandard 127 318 175 40 28 — — 688 Doubtful — 9 — 7 18 — — 34 Total Direct financing leases 53,413 53,928 25,622 11,428 3,382 329 — 148,102 Current period gross charge-offs — 741 592 325 72 1 — 1,731 Consumer Pass 6,807 6,272 5,200 2,088 438 314 — 21,119 Substandard — 3 47 49 — — — 99 Total Consumer 6,807 6,275 5,247 2,137 438 314 — 21,218 Current period gross charge-offs 47 89 114 32 — 3 — 285 Total Loans and Leases $ 151,581 $ 212,643 $ 257,396 $ 189,395 $ 68,550 $ 170,994 $ 124,737 $ 1,175,296 Total current period gross charge-offs $ 47 $ 830 $ 706 $ 357 $ 72 $ 30 $ — $ 2,042 83 2023 2022 2021 2020 2019 Prior Revolving loans amortized cost basis Total As of December 31, 2023: Commercial mortgage Pass $ 31,795 $ 83,567 $ 69,863 $ 33,226 $ 45,746 $ 60,563 $ 11,495 $ 336,255 Special Mention — — — 4,850 — — — 4,850 Substandard — — — — — 528 — 528 Total Commercial mortgage 31,795 83,567 69,863 38,076 45,746 61,091 11,495 341,633 Current period gross charge-offs — — — — — — — — Commercial and industrial Pass 38,721 13,509 13,390 4,348 1,727 9,430 30,287 111,412 Substandard — — — 10 — 138 3,868 4,016 Total Commercial and industrial 38,721 13,509 13,390 4,358 1,727 9,568 34,155 115,428 Current period gross charge-offs — 58 — — — — — 58 Construction and development Pass 36,868 81,715 30,383 2,981 111 847 — 152,905 Substandard — — — — 4,900 — — 4,900 Total Construction and development 36,868 81,715 30,383 2,981 5,011 847 — 157,805 Current period gross charge-offs — — — — — — — — Multi-family Pass 4,443 39,271 37,422 6,383 7,291 18,400 25,547 138,757 Total Multi-family 4,443 39,271 37,422 6,383 7,291 18,400 25,547 138,757 Current period gross charge-offs — — — — — — — — Residential mortgage Pass 31,352 31,447 35,174 17,651 8,812 36,118 216 160,770 Substandard — — — — 92 1,261 — 1,353 Total Residential mortgage 31,352 31,447 35,174 17,651 8,904 37,379 216 162,123 Current period gross charge-offs — — — — — — — — Home equity lines of credit Pass — — 282 — — — 10,597 10,879 Substandard — — — — — — 25 25 Total Home equity lines of credit — — 282 — — — 10,622 10,904 Current period gross charge-offs — — — — — — — — Direct financing leases Pass 76,018 41,838 24,675 10,264 2,895 462 — 156,152 Substandard 80 184 80 21 — — — 365 Doubtful 79 — — — 2 — — 81 Total Direct financing leases 76,177 42,022 24,755 10,285 2,897 462 — 156,598 Current period gross charge-offs 105 276 459 85 11 1 — 937 Consumer Pass 9,775 8,223 3,713 840 358 279 — 23,188 Substandard 35 17 15 — 9 — — 76 Total Consumer 9,810 8,240 3,728 840 367 279 — 23,264 Current period gross charge-offs 39 69 75 25 7 — — 215 Total Loans and Leases $ 229,166 $ 299,771 $ 214,997 $ 80,574 $ 71,943 $ 128,026 $ 82,035 $ 1,106,512 Total current period gross charge-offs $ 144 $ 403 $ 534 $ 110 $ 18 $ 1 $ — $ 1,210 84 The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of December 31, 2024 and 2023: 2024 Delinquent Loans Total Portfolio Loans Total Accruing Loans 90 Days or More Past Due 30-59 Days Past Due 60-89 Days Past Due 90 Days and Over Total Past Due Current Commercial mortgage $ 101 $ 216 $ — $ 317 $ 371,388 $ 371,705 $ — Commercial and industrial 419 — — 419 125,948 126,367 — Construction and development 429 240 4,900 5,569 127,001 132,570 — Multi-family — — — — 185,864 185,864 — Residential mortgage 781 540 1,356 2,677 169,967 172,644 1,261 Home equity lines of credit 11 58 14 83 16,743 16,826 14 Leases 673 362 340 1,375 146,727 148,102 340 Consumer 108 183 99 390 20,828 21,218 99 Totals $ 2,522 $ 1,599 $ 6,709 $ 10,830 $ 1,164,466 $ 1,175,296 $ 1,714 2023 Delinquent Loans Total Portfolio Loans Total Accruing Loans 90 Days or More Past Due 30-59 Days Past Due 60-89 Days Past Due 90 Days and Over Total Past Due Current Commercial mortgage $ — $ — $ — $ — $ 341,633 $ 341,633 $ — Commercial and industrial 136 — — 136 115,292 115,428 — Construction and development — 75 4,900 4,975 152,830 157,805 — Multi-family — — — — 138,757 138,757 — Residential mortgage 688 306 1,379 2,373 159,750 162,123 1,278 Home equity lines of credit 463 — 25 488 10,416 10,904 25 Leases 452 236 296 984 155,614 156,598 296 Consumer 292 148 76 516 22,748 23,264 76 Totals $ 2,031 $ 765 $ 6,676 $ 9,472 $ 1,097,040 $ 1,106,512 $ 1,675 85 The following table presents information on the Company's nonaccrual loans and leases at December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Nonaccrual loans and leases Nonaccrual loans and leases without an allowance for credit losses Nonaccrual loans and leases Nonaccrual loans and leases without an allowance for credit losses Commercial and industrial $ 35 $ — $ 1,241 $ 1,202 Construction and development 4,900 — 4,900 — Residential mortgage 94 94 101 101 Direct financing leases 34 34 82 82 Total nonaccrual loans and leases $ 5,063 $ 128 $ 6,324 $ 1,385 During the years ended December 31, 2024 and 2023, the Company recognized $ 5,000 and $ 57,000 , respectively, of interest income on nonaccrual loans and leases. The following tables present the Company's amortized cost basis of collateral dependent loans, and their respective collateral type, which are individually analyzed to determine expected credit losses, at the dates indicated: December 31, 2024 Commercial Real Estate Multi-family Housing Residential Real Estate Other Total Allowance on Collateral Dependent Loans Commercial mortgage $ 4,724 $ — $ — $ — $ 4,724 $ — Commercial and industrial — — — 1,501 1,501 — Construction and development 4,900 — — — 4,900 1,000 Multi-family — 1,461 — — 1,461 — Residential mortgage — — 143 — 143 — Total $ 9,624 $ 1,461 $ 143 $ 1,501 $ 12,729 $ 1,000 December 31, 2023 Commercial Real Estate Residential Real Estate Other Total Allowance on Collateral Dependent Loans Commercial mortgage $ 5,377 $ — $ — $ 5,377 $ — Commercial and industrial — — 3,868 3,868 — Construction and development 4,900 — — 4,900 1,000 Residential mortgage — 152 — 152 — Total $ 10,277 $ 152 $ 3,868 $ 14,297 $ 1,000 86 Loan Modification Disclosures under ASU 2022-02 In certain situations, the Company may modify the terms of a loan or lease to a borrower experiencing financial difficulty. These modifications may include payment delays, term extensions, or interest-rate reductions. In some cases, combinations of modifications may be made to the same loan or lease. If a determination is made that a modified loan or lease has been deemed uncollectible, the loan or lease (or portion of the loan or lease) is charged-off, reducing the amortized cost basis of the loan or lease and adjusting the allowance for credit losses. During the year ended December 31, 2024, the Company modified two residential mortgage loans, both involving term extensions, to borrowers experiencing financial difficulty. The total amortized cost basis of the loans modified at December 31, 2024 was $ 168,000 . For the year ended December 31, 2024, loan and lease modifications to borrowers experiencing financial difficulty resulted in a weighted average term extension of 20 months for the modified loans. During the year ended December 31, 2023, the Company had no new loan or lease modifications to borrowers experiencing financial difficulty. There were no modified loans or leases that had a payment default during the years ended December 31, 2024 and 2023 and that were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. Other Real Estate Owned At December 31, 2024 and 2023, the balance of real estate owned included $ 37,000 and $ 136,000 , respectively, of foreclosed real estate properties recorded as a result of obtaining physical possession of the property. At December 31, 2024 and 2023, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceeds were in process was $ 275,000 and $ 470,000 , respectively. Direct Financing Leases The following lists the components of the net investment in direct financing leases: December 31, 2024 December 31, 2023 Total minimum lease payments to be received $ 168,934 $ 177,952 Initial direct costs 9,360 9,702 178,294 187,654 Less: Unearned income ( 30,192 ) ( 31,056 ) Net investment in direct finance leases $ 148,102 $ 156,598 The following summarizes the future minimum lease payments receivable subsequent to December 31, 2024: 2025 $ 64,503 2026 49,516 2027 32,639 2028 17,021 2029 4,979 Thereafter 276 $ 168,934 87 Allowance for Credit Losses on Loans and Leases The allowance for credit losses on loans and leases is established for current expected credit losses on the Company's loan and lease portfolios in accordance with ASC Topic 326. This requires significant judgement to estimate credit losses measured on a collective pool basis when similar risk characteristics exist, and for loans evaluated individually. The Company estimates expected future losses for the loan's entire contractual term, taking into account expected payments when appropriate. The allowance is an estimation based on management's evaluation of expected losses related to the Company's financial assets measured at amortized cost. It considers relevant available information from internal and external sources relating to the historical loss experience, current conditions and reasonable and supportable forecasts for the Company's outstanding loan and lease balances. The Company utilizes a CF analysis method of estimating expected losses, which relies on key inputs and assumptions. Significant factors affecting the calculation are the segmenting of loans and leases based upon similar risk characteristics, applied loss rates based upon reasonable and supportable forecasts, and contractual term adjustments, including prepayment and curtailment adjustments. To ensure the allowance is maintained at an adequate level, a detailed analysis is performed on a quarterly basis, with an appropriate provision made to adjust the allowance. The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses, as it is the Company's policy to write off accrued interest in a timely manner as it is deemed uncollectible by reversing interest income. Accrued interest receivable totaled $ 4.1 million and $ 3.8 million at December 31, 2024 and 2023, respectively. The Company categorizes its loan portfolios into eight segments, as discussed above, based on similar risk characteristics. Loans within each segment are collectively evaluated using either a CF methodology or remaining life methodology. When estimating for credit loss, the Company forecasts the first four quarters of the credit loss estimate and reverts to a long-run average of each considered factor. The Company developed its reasonable and supportable forecasts using economic data, such as gross domestic product and unemployment rate. Qualitative adjustments are applied to each collectively segmented pool to appropriately capture differences in current or expected qualitative risk characteristics. When evaluating the estimation for expected credit losses, the Company evaluates these qualitative adjustments for any changes in: • lending policies, procedures, and strategies, • the nature and volume of the loan and lease portfolio, • international, national, regional, and local conditions, • the experience, depth, and ability of lending management, • the volume and severity of past due loans, • the quality of the loan review system, • the underlying collateral, • concentration risk, and • the effect of other external factors. 88 The following tables summarize changes in the allowance for credit losses by segment for the years ended December 31, 2024 and 2023: Balances, December 31, 2023 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, December 31, 2024 Commercial mortgage $ 4,655 $ ( 169 ) $ — $ — $ 4,486 Commercial and industrial 1,281 138 ( 16 ) 80 1,483 Construction and development 3,883 ( 1,640 ) — — 2,243 Multi-family 1,789 871 — — 2,660 Residential mortgage 1,681 225 ( 10 ) 14 1,910 Home equity 102 82 — — 184 Direct financing leases 1,955 1,942 ( 1,731 ) 303 2,469 Consumer 317 185 ( 285 ) 139 356 Total $ 15,663 $ 1,634 $ ( 2,042 ) $ 536 $ 15,791 Balances, December 31, 2022 Impact of adopting ASC 326 Balances, January 1, 2023 Post-ASC 326 adoption Provision for (reversal of) credit losses Charge-offs Recoveries Balances, December 31, 2023 Commercial mortgage $ 4,776 $ ( 395 ) $ 4,381 $ 261 $ — $ 13 $ 4,655 Commercial and industrial 1,291 360 1,651 ( 390 ) ( 58 ) 78 1,281 Construction and development 2,855 784 3,639 244 — — 3,883 Multi-family 1,955 ( 99 ) 1,856 ( 67 ) — — 1,789 Residential mortgage 76 1,439 1,515 129 — 37 1,681 Home equity 23 89 112 ( 10 ) — — 102 Direct financing leases 1,196 422 1,618 925 ( 937 ) 349 1,955 Consumer 241 64 305 172 ( 215 ) 55 317 Total $ 12,413 $ 2,664 $ 15,077 $ 1,264 $ ( 1,210 ) $ 532 $ 15,663 Our commercial loan portfolio, consisting of commercial and multi-family real estate loans, commercial and industrial loans, and construction loans, represented 69.5 % and 68.1 % of our portfolio as of December 31, 2024 and 2023, respectively. The allowance for credit losses on loans and leases allocated to the commercial loan portfolio represented 68.9 % and 74.1 % of our total allowance at December 31, 2024 and 2023, respectively. Economic Outlook Due to the future-focused nature of the calculation for the allowance for credit losses, management must make significant assumptions. Estimating an appropriate allowance requires management to use relevant forward-looking information drawn from reasonable and supportable forecasts. Economic factors are a consequential part of these forecasts, and as such are evaluated periodically for developments that may impact the Company's allowance for credit losses and loan and lease portfolio. As of December 31, 2024, the primary economic factors affecting the Company's loan and lease portfolio are persistent inflation, higher interest rates, a weakened economic growth and unemployment outlook, and continuing geopolitical risk. These key factors will continue to adversely impact the Company's loan and lease portfolio for the near future. 89 The Company remains committed to three growth market regions: Columbus, Ohio, Cincinnati/Dayton/Springfield, Ohio, and Indianapolis, Indiana. As high-growth areas, these market regions specialize in commercial real estate loans. Their respective forecasts are described below: • Columbus, Ohio - The market region continues to forecast overall estimated job growth for the first half of 2025. Recent construction on a new and expanded terminal at John Glenn Columbus International Airport could potentially impact the trajectory of the local market. • Cincinnati/Dayton/Springfield, Ohio - The economic outlook for this market region for the first half of 2025 continues to remain positive. The Cincinnati/Northern Kentucky International Airport is the fastest-growing U.S. airport on a year-over-year basis. The region's unemployment rate was slightly lower than the national unemployment rate during the fourth quarter of 2024. • Indianapolis, Indiana - The market region experienced continuous and balanced economic growth throughout 2024. The expectations for the first half of 2025 are consistent with 2024 results. Expectations are driven primarily by an expanding labor market, retail sales growth, and increasing median household incomes. Future potential economic volatility may have a significant impact on the Company's loan and lease portfolio, specifically the allowance for credit losses. There are a myriad of potential outcomes, and the variances may be significant and unpredictable. As a result, the Company's future estimates may fluctuate during 2025. Allowance for Credit Losses on Unfunded Commitments The allowance for credit losses on unfunded commitments is included in other liabilities on the Condensed Consolidated Balance Sheets. The estimate of expected losses on unfunded commitments is calculated based on the loss rate for the loan or lease segment in which the loan or lease commitments would be classified if funded, adjusted for the estimate of funding probability. Additional provisions applied to the allowance are recognized in the provision for credit losses on the Consolidated Statements of Income. The following table details activity in the allowance for credit losses on unfunded commitments during the year ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Beginning balance $ 1,642 $ — Impact of adopting ASC 326 — 2,374 Reversal of provision for credit losses ( 1,084 ) ( 732 ) Ending balance $ 558 $ 1,642 90 Note 6: Premises and Equipment 2024 2023 Cost Land $ 3,061 $ 3,061 Buildings 15,705 15,681 Furniture and equipment 8,153 7,666 Computer software 1,211 1,197 Construction in progress 506 594 Total cost 28,636 28,199 Accumulated depreciation and amortization ( 15,714 ) ( 14,887 ) Net $ 12,922 $ 13,312 Note 7: Leases The Company enters into leases for certain retail branches, land, and office space. Operating leases are included in other assets and the lease liability is included in other liabilities in our balance sheets. The Company does not have any finance leases. Lease right-of-use (ROU) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments when the rate implicit in a lease is not known. The Company's incremental borrowing rate is based on the FHLB amortizing advance rate, adjusted for the lease term and other factors. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company's leases are generally for periods of five to 15 years with various renewal options. The exercise of such lease renewal options is not included in the present value of lease obligations unless it is reasonably certain that the option will be exercised. The Company has lease agreements which contain both lease and non-lease components such as common area maintenance charges, real estate taxes, and insurance. Non-lease components are not included in the measurement of the lease liability and are recognized in expense when incurred. The Company has elected not to recognize short-term leases, with original lease terms of twelve months or less, on the Company's balance sheet. Certain of the Company's lease arrangements include rental payments adjusted periodically for inflation. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. 91 Supplemental balance sheet information related to leases is presented in the table below as of December 31, 2024 and 2023: 2024 2023 Operating lease assets $ 393 $ 450 Total lease ROU assets $ 393 $ 450 Operating lease liabilities $ 404 $ 457 Total lease liabilities $ 404 $ 457 Weighted average remaining lease term (years) Operating leases 6.2 7.2 Weighted average discount rate Operating leases 3.37 % 3.37 % The table below presents the components of lease expense for the years ended December 31, 2024 and 2023: 2024 2023 Lease cost: Operating lease cost $ 92 $ 90 Total lease cost: $ 92 $ 90 Supplemental cash flow information related to leases is presented in the tables below. Maturity of lease liabilities 2025 $ 70 2026 72 2027 73 2028 73 2029 59 Thereafter 105 Total lease payments $ 452 Less: Present value discount 48 Present value of lease liabilities $ 404 Note 8: Loan Servicing Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage loans serviced for others totaled $ 226,528,000 and $ 222,217,000 at December 31, 2024 and 2023, respectively. The aggregate fair value of capitalized servicing rights at December 31, 2024 and 2023 totaled approximately $ 2,559,000 and $ 2,482,000 , respectively. Comparable market values and a valuation model that calculates the 92 present value of future cash flows were used to estimate fair value. For purposes of measuring impairment, risk characteristics including product type, investor type and interest rates, were used to stratify the originated mortgage-servicing rights. 2024 2023 Servicing Rights Balances, beginning of period $ 1,945 $ 2,012 Servicing rights capitalized 198 147 Amortization of servicing rights ( 192 ) ( 214 ) Balances, end of period $ 1,951 $ 1,945 Note 9: Qualified Affordable Housing Investments The Company has investments in certain limited partnerships that fund affordable housing projects and provide the Company with low income housing tax credits ("LIHTC"). At December 31, 2024 and 2023, the balance of these investments in LIHTC totaled $ 951,000 and $ 1.1 million, respectively. These balances are reflected in the other assets line of the Condensed Consolidated Balance Sheet. The assets are amortized as a component of the provision for income taxes. The following table summarizes the amortization expense and tax credits recognized for the Company's LIHTC investments for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Amortization expense $ 178 $ 184 Tax credits recognized 184 191 Note 10: Deposits 2024 2023 Demand deposits $ 434,228 $ 405,338 Savings deposits 112,499 117,659 Brokered certificates 257,587 268,838 Certificates and other time deposits greater than $250,000 67,493 55,710 Other certificates and time deposits 222,133 193,595 $ 1,093,940 $ 1,041,140 93 Certificates and other time deposits maturing in years ending December 31: 2025 $ 366,777 2026 138,037 2027 27,706 2028 10,835 2029 2,094 Thereafter 1,764 $ 547,213 Note 11: Federal Home Loan Bank Advances First Bank has Federal Home Loan Bank advances, with interest rates ranging from 0.61 % to 5.33 %. The maturities of FHLB advances at December 31, 2024 were as follows: FHLB Advances 2025 $ 125,000 2026 74,000 2027 23,000 2028 16,000 2029 7,000 Thereafter 20,000 $ 265,000 First mortgage loans and investment securities totaling $ 539,251,000 and $ 521,564,000 were pledged as collateral for FHLB advances at December 31, 2024 and 2023, respectively. Certain advances are subject to restrictions or penalties in the event of prepayment. FHLB advances totaling $ 42,000,000 are subject to an option by the FHLB to put the entire advance to a periodic adjustable rate on the lock-out date. The adjustable rate would be for the remaining term at a predetermined rate based on the Secured Overnight Financing Rate, or SOFR. If the FHLB exercises its option to convert the advance to an adjustable rate, the advance will be prepayable at the Company’s option, at par and without a penalty. The Bank has an available line of credit with the FHLB totaling $ 10,000,000 . The line of credit expires April 2025, renews annually, and bears interest at a rate equal to the current variable advance rate. At December 31, 2024, the current interest rate was 4.67 %. There were no amounts outstanding on the line at December 31, 2024 or 2023. 94 Note 12: Income Tax 2024 2023 Income tax expense (benefit) Currently payable Federal $ 1,328 $ 877 State — ( 2 ) Deferred Federal 250 538 State ( 92 ) 103 Total income tax expense $ 1,486 $ 1,516 Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 21% $ 2,281 $ 2,311 Tax-exempt interest ( 672 ) ( 694 ) Effect of state income taxes ( 92 ) 80 ESOP ( 92 ) ( 26 ) Cash surrender value - life insurance ( 19 ) ( 19 ) Low income housing tax credit ( 30 ) ( 30 ) Small insurance captive premiums ( 183 ) ( 218 ) Stock compensation 11 51 Carryforward attribute expiration 407 — Other ( 125 ) 61 Actual tax expense $ 1,486 $ 1,516 95 A cumulative deferred tax asset is included in other assets. The components of the asset are as follows: 2024 2023 Assets Allowance for credit losses $ 3,816 $ 4,039 Net operating loss carryforward 254 184 Nonaccrual interest 28 39 Investment basis 4 4 Deferred compensation 498 492 Stock compensation 431 333 ESOP 328 — Unrealized loss on securities available for sale 12,176 11,442 Charitable contributions 4 549 Other 441 493 Total assets 17,980 17,575 Liabilities FHLB stock dividend 166 166 Fixed assets 1 138 Mortgage-servicing rights 455 454 Prepaid assets 507 529 Other 92 105 Total liabilities 1,221 1,392 Net deferred tax asset $ 16,759 $ 16,183 As of December 31, 2024, the Company had approximately $ 20,000 of federal charitable contribution carryforwards, which will expire in 2026, and state net operating loss carryforwards of $ 5.1 million, which will begin to expire in 2041. At December 31, 2024 and 2023, the Company determined that it is more likely than not that the deferred tax assets will be realized, largely based on available tax planning strategies and its projections of future taxable income. Therefore, no valuation reserve was recorded at December 31, 2024 and 2023. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning the evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies and assessments of current and future economic and business conditions. Positive evidence includes current positive earnings trends and the probability that taxable income will be generated in future periods, while negative evidence includes any cumulative losses in the current year and prior two years and general business and economic trends. Failure to achieve sufficient projected taxable income might affect the ultimate realization of the net deferred tax assets. Note 13: Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, included in stockholders' equity, are as follows: 2024 2023 Net unrealized loss on available for sale securities $ ( 57,982 ) $ ( 54,486 ) Tax benefit 12,176 11,441 Net-of-tax amount $ ( 45,806 ) $ ( 43,045 ) 96 Note 14: Commitments and Contingent Liabilities In the normal course of business, there are outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying consolidated financial statements. First Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. First Bank uses the same credit policies in making such commitments as it does for instruments that are included in the consolidated statements of financial condition. Financial instruments whose contract amounts represent credit risk as of December 31, 2024 and 2023, were as follows: 2024 2023 Commitments to extend credit $ 126,239 $ 190,274 Standby letters of credit $ 1,642 $ 2,410 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The subsidiary evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the subsidiary upon extension of credit, is based on management's credit evaluation. Collateral held varies, but may include residential real estate, income-producing commercial properties, or other assets of the borrower. Standby letters of credit are conditional commitments issued by the subsidiary to guarantee the performance of the customer to a third party. Note 15: Benefit Plans 401(k) The Company has a retirement savings 401(k) plan, in which substantially all employees may participate. The Company matches employees' contributions at the rate of 50 percent for the first 6 percent of base salary contributed by participants. The Company’s expense for the plan was $ 276,000 and $ 237,000 for the years ended December 31, 2024 and 2023, respectively. Employee Stock Ownership Plan As part of the 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 price of $ 13.59 per share in the open market with funds provided by a loan from the Company. The Company is obligated at the option of each beneficiary to repurchase shares of the ESOP upon the beneficiary’s termination or after retirement. 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 are not vested, are excluded from the computation of average shares outstanding for earnings per share calculation. Accordingly, $ 10,722,000 and $ 11,458,000 of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity at December 31, 2024 and 2023, respectively. Shares are released to participants proportionately as the loan is repaid. 97 ESOP expense for the years ended December 31, 2024 and 2023 was $ 661,000 and $ 612,000 , respectively. December 31, 2024 December 31, 2023 Earned ESOP shares 293,095 238,988 Unearned ESOP shares 789,035 843,142 Total ESOP shares 1,082,130 1,082,130 Quoted per share price $ 14.15 $ 11.51 Fair value of earned shares (in thousands) $ 4,147 $ 2,751 Fair value of unearned shares (in thousands) $ 11,165 $ 9,705 Richmond Mutual Bancorporation, Inc. 2020 Equity Incentive Plan On September 15, 2020, the Company's stockholders approved the Richmond Mutual Bancorporation, Inc. 2020 Equity Incentive Plan ("2020 EIP") which provides for the grant to eligible participants of up to (i) 1,352,662 shares of Company common stock to be issued upon the exercise of stock options and stock appreciation rights and (ii) 541,065 shares of Company common stock to participants as restricted stock awards (which may be in the form of shares of common stock or share units giving the participant the right to receive shares of common stock at a specified future date). Restricted Stock Awards. On October 1, 2020, the Company awarded 449,086 shares of common stock under the 2020 EIP with a grant date fair value of $ 10.53 per share (total fair value of $ 4.7 million at issuance) to eligible participants. On April 1, 2021, the Company awarded an additional 4,000 shares of common stock under the 2020 EIP with a grant date fair value of $ 13.86 (total fair value of $ 55,000 at issuance) to eligible participants. These awards vest in five equal annual installments with the first vesting occurring on June 30, 2021. Forfeited shares may be awarded to other eligible recipients in future grants until the 2020 EIP terminates in September 2030. The following table summarizes the restricted stock awards activity in the 2020 EIP for the year ended December 31, 2024. Year Ended December 31, 2024 Number of Restricted Shares Weighted Average Grant Date Fair Value Non-vested, beginning of year 167,158 $ 10.56 Granted — — Vested ( 83,379 ) 10.55 Forfeited ( 400 ) 13.86 Non-vested, end of year 83,379 $ 10.55 Total compensation cost recognized in the income statement for restricted stock awards during 2024 and 2023 was $ 880,000 and $ 974,000 , respectively, and the related tax benefit recognized was $ 185,000 and $ 205,000 , respectively. As of December 31, 2024, unrecognized compensation expense related to restricted stock awards was $ 434,000 . 98 Stock Option Plan. On October 1, 2020, the Company awarded options to purchase 1,095,657 shares of common stock under the 2020 EIP with an exercise price $ 10.53 per share, the fair value of a share of the Company's common stock on the date of the grant, to eligible participants. On April 1, 2021, the Company awarded options to purchase 8,000 shares of common stock under the 2020 EIP with an exercise price of $ 13.86 per share, the fair value of the Company's common stock on the date of the grant, to eligible participants. The 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. A net-settle stock option exercise allows the option holder to pay the exercise price by withholding a portion of the shares that would otherwise be delivered upon a cash exercise of the option. The withheld shares are then canceled and are no longer available for future grants. The following table summarizes the stock option activity in the 2020 EIP during the year ended December 31, 2024. 2024 Number of Shares Weighted-Average Exercise Price Balance at beginning of year 1,050,961 $ 10.56 Exercised ( 16,232 ) 10.53 Forfeited/expired ( 18,232 ) 10.90 Balance at end of year 1,016,497 10.55 Exercisable at end of year 812,401 $ 10.55 The fair value of options granted is estimated on the date of grant using a Black Scholes model with the following assumptions: April 1, 2021 Dividend yields 1.90 % Volatility factors of expected market price of common stock 26.98 % Risk-free interest rates 1.16 % Expected life of options 6.1 years A summary of the status of the Company stock option shares as of December 31, 2024 is presented below. Shares Weighted Average Grant Date Fair Value Non-vested, beginning of year 408,992 $ 2.91 Vested ( 204,096 ) 2.91 Forfeited ( 800 ) 3.02 Non-vested, end of year 204,096 $ 2.91 Total compensation cost recognized in the income statement for option-based payment arrangements during 2024 and 2023 was $ 594,000 and $ 653,000 , and the related tax benefit recognized was $ 64,000 and $ 76,000 , respectively. As of December 31, 2024, unrecognized compensation expense related to the stock option awards was $ 293,000 . 99 Note 16: Earnings Per Share Basic earnings per share ("EPS") is computed by dividing net income allocated to common stock by the weighted average number of common shares outstanding during the period which excludes the participating securities. Diluted EPS includes the dilutive effect of additional potential common shares from stock compensation awards, but excludes awards considered participating securities. ESOP shares are not considered outstanding for EPS until they are earned. The following table presents the computation of basic and diluted EPS for the periods indicated (in thousands, except for share and per share data): For the Year Ended For the Year Ended December 31, 2024 December 31, 2023 Net income $ 9,377 $ 9,487 Shares outstanding for Basic EPS: Average shares outstanding 11,028,029 11,487,615 Less: average restricted stock award shares not vested 124,747 214,813 Less: average unearned ESOP Shares 822,631 876,680 Shares outstanding for Basic EPS 10,080,651 10,396,122 Additional Dilutive Shares 148,061 54,489 Shares outstanding for Diluted EPS 10,228,712 10,450,611 Basic EPS $ 0.93 $ 0.91 Diluted EPS $ 0.92 $ 0.91 Note 17: Dividend and Capital Restrictions The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. Generally, the Bank's payment of dividends is limited to net income for the current year plus the two preceding calendar years, less capital distributions paid over the comparable period. The Bank’s payment of dividends is also subject to the restrictions of the capital conservation buffer as discussed in Note 18. Note 18: Regulatory Capital First Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, First Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under U.S. GAAP, regulatory reporting requirements and regulatory capital standards. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, First Bank’s regulators could require adjustments to regulatory capital not reflected in these financial statements. Quantitative measures established by regulatory capital standards to ensure capital adequacy require First Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined) to risk-weighted assets (as defined), common equity Tier I capital (as defined) to total risk-weighted 100 assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2024, that First Bank meets all capital adequacy requirements to which it is subject. As of December 31, 2024, the most recent notification from the regulators categorized First Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, First Bank must maintain minimum total risk-based capital, Tier I risk-based capital, common equity Tier I risk-based capital and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed First Bank’s category. First Bank’s actual and required capital amounts and ratios are as follows: Actual Minimum for Capital Adequacy Purposes Minimum to be Categorized as "Well-Capitalized" Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2024 Total capital (to risk-weighted assets) $ 181,415 14.2 % $ 102,014 8.0 % $ 127,518 10.0 % Tier I capital (to risk-weighted assets) 165,471 13.0 76,511 6.0 102,014 8.0 Common Equity Tier I capital (to risk-weighted assets) 165,471 13.0 57,383 4.5 82,887 6.5 Tier I leverage capital (to average assets) 165,471 10.7 61,579 4.0 76,974 5.0 As of December 31, 2023 Total capital (to risk-weighted assets) $ 174,938 14.1 % $ 99,247 8.0 % $ 124,059 10.0 % Tier I capital (to risk-weighted assets) 159,409 12.8 74,435 6.0 99,247 8.0 Common Equity Tier I capital (to risk-weighted assets) 159,409 12.8 55,826 4.5 80,638 6.5 Tier I leverage capital (to average assets) 159,409 10.6 59,931 4.0 74,914 5.0 The above minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions, including share repurchases, dividend payments and certain discretionary bonus payments to executive officers. The capital conservation buffer was 2.50 % of total risk weighted assets at both December 31, 2024 and December 31, 2023. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Note 19: Related Party Transactions The Company has entered into transactions with certain directors, executive officers and its affiliates or associates (related parties). Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates, as those prevailing at the same time for comparable transactions with other customers. The aggregate amount of loans to such related parties at December 31, 2024 and 2023 was approximately $ 8,557,000 and $ 8,624,000 , respectively. 101 Annual activity consisted of the following: 2024 2023 Balance, beginning of the year $ 8,624 $ 7,988 New loans 419 1,161 Change in composition — — Repayments ( 486 ) ( 525 ) Balance, end of the year $ 8,557 $ 8,624 Deposits from related parties held by the Company at December 31, 2024 and 2023 totaled $ 3,837,000 and $ 2,702,000 , respectively. Note 20: Fair Values of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities Recurring Measurements The following tables present the fair value measurements of assets recognized in the 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 December 31, 2024 and 2023: Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 Available-for-sale securities U.S. Treasury securities $ 3,161 $ 3,161 $ — $ — SBA Pools 3,700 — 3,700 — Federal agencies 13,334 — 13,334 — State and municipal obligations 130,359 — 130,359 — Mortgage-backed securities - GSE residential 98,313 — 98,313 — Corporate obligations 9,325 — 9,325 — $ 258,192 $ 3,161 $ 255,031 $ — 102 Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2023 Available-for-sale securities U.S. Treasury securities $ 2,976 $ 2,976 $ — $ — SBA Pools 4,772 — 4,772 — Federal agencies 13,153 — 13,153 — State and municipal obligations 141,446 — 141,446 — Mortgage-backed securities - GSE residential 111,481 — 111,481 — Corporate obligations 8,860 — 8,860 — $ 282,688 $ 2,976 $ 279,712 $ — 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 year ended December 31, 2024. Available-for-Sale Securities Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy, which includes equity securities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include agency securities, obligations of state and political subdivisions, mortgage-backed securities, and SBA pools. 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 As of December 31, 2024 and 2023, there were no assets or liabilities measured at fair value on a nonrecurring basis. 103 Fair Value of Financial Instruments The following tables present estimated fair values of the Company’s financial instruments at December 31, 2024 and 2023. Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 Financial assets Cash and cash equivalents $ 21,757 $ 21,757 $ — $ — Interest-earning time deposits 300 — 300 — Available-for-sale securities 258,192 3,161 255,031 — Held-to-maturity securities 3,498 — 3,421 — Loans held for sale 1,093 — — 1,093 Loans and leases receivable, net 1,158,879 — — 1,099,274 Federal Reserve and FHLB stock 13,907 — 13,907 — Interest receivable 6,030 — 6,030 — Financial liabilities Deposits 1,093,940 — 1,095,961 — FHLB advances 265,000 — 264,162 — Interest payable 4,832 — 4,832 — Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2023 Financial assets Cash and cash equivalents $ 20,240 $ 20,240 $ — $ — Available-for-sale securities 282,688 2,976 279,712 — Held-to-maturity securities 4,950 — 4,921 — Loans held for sale 794 — — 794 Loans and leases receivable, net 1,090,073 — — 985,976 Federal Reserve and FHLB stock 12,647 — 12,647 — Interest receivable 5,844 — 5,844 — Financial liabilities Deposits 1,041,140 — 1,038,178 — FHLB advances 271,000 — 266,885 — Interest payable 4,397 — 4,397 — While these estimates of fair value are based on management’s judgment of the most appropriate factors, there is no assurance that were the Company to have disposed of such items at December 31, 2024 and 2023, the estimated fair values would necessarily have been achieved at that date, since market values may differ depending on various circumstances. The estimated fair values at December 31, 2024 and 2023 should not necessarily be considered to apply at subsequent dates. 104 The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value. Cash and Cash Equivalents, Interest-Earning Time Deposits and Federal Reserve and Federal Home Loan Bank Stock – The carrying amount approximates fair value. Held-to-Maturity Securities – Fair value is based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Loans and Leases – The fair value of loans and leases is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. The carrying amount of accrued interest approximates its fair value. Deposits – Deposits include demand deposits, savings accounts, NOW accounts and money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. Interest Receivable and Interest Payable – The carrying amount approximates fair value. Federal Home Loan Bank Advances – Rates currently available to the Company for borrowings with similar terms and remaining maturities are used to estimate the fair value of existing debt. 105 Note 21: Condensed Financial Information (Parent Company Only) Presented below is condensed financial information as to financial position, results of operations and cash flows of the Company: Condensed Balance Sheets 2024 2023 Assets Cash and cash equivalents $ 5,545 $ 13,225 Investment in subsidiaries 122,733 118,399 Other assets 6,987 5,617 Total assets $ 135,265 $ 137,241 Other Liabilities $ 2,393 $ 2,381 Stockholders' Equity 132,872 134,860 Total liabilities and stockholders' equity $ 135,265 $ 137,241 Condensed Statements of Income and Comprehensive Income 2024 2023 Income: Dividends from bank subsidiary $ 4,750 $ — Other income 587 638 Total income 5,337 638 Other expenses 2,875 3,120 Income (loss) before income tax benefit and undistributed subsidiary (loss) income 2,462 ( 2,482 ) Income tax benefit ( 301 ) ( 524 ) Equity in undistributed income of subsidiaries (dividends in excess of net income): Bank subsidiary 5,629 10,344 Captive subsidiary 985 1,101 Net income $ 9,377 $ 9,487 Comprehensive income $ 6,616 $ 16,193 Condensed Statements of Cash Flows 2024 2023 Operating Activities Net income $ 9,377 $ 9,487 Adjustments to reconcile net income to net cash from operating activities: Equity in undistributed net income of subsidiaries ( 6,614 ) ( 11,446 ) ESOP expense 661 612 Stock based compensation 1,474 1,627 Changes in other assets and other liabilities ( 1,839 ) ( 1,113 ) Net cash (used in) provided by operating activities 3,059 ( 833 ) Investing Activities Net cash used in investing activities — — Financing Activities Dividends paid ( 5,697 ) ( 5,920 ) Repurchase of common stock ( 5,042 ) ( 6,251 ) Net cash used in financing activities ( 10,739 ) ( 12,171 ) Net Change in Cash and Cash Equivalents ( 7,680 ) ( 13,004 ) Cash and Cash Equivalents, Beginning of Period 13,225 26,229 Cash and Cash Equivalents, End of Period $ 5,545 $ 13,225 106 Note 22: Segment Information The Company has one reportable segment: community banking. The Company's reportable segment is determined by the Chief Executive Officer, who serves as the chief operating decision maker (“CODM”), based on information regarding the Company's products and services. The CODM evaluates the financial performance of the Company's business components by assessing revenue streams, significant expenses, and budget-to-actual results. The Company's primary source of revenue is providing banking services to its customers. Significant expenses associated with banking operations include interest expense, credit loss expense, and salaries and employee benefits. The CODM evaluates performance, directs resource allocation, and makes key operating decisions based on consolidated net income reported in the Consolidated Statements of Income. Segment assets are measured based on total consolidated assets as reported in the Consolidated Balance Sheets. Note 23: Significant Estimates and Concentrations Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for loan losses are reflected in the footnote regarding loans. Current vulnerabilities due to certain concentrations of credit risk are discussed in the footnote on commitments and credit risk. Other significant estimates and concentrations not discussed in those footnotes include: General Litigation – The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company. Note 24: Subsequent Events Subsequent events have been evaluated through March 27, 2025, which is the date the consolidated financial statements were issued. 107 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None.