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Richmond Mutual Bancorporation, Inc. - Quarter Report: 2022 June (Form 10-Q)


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission file number: 001-38956
RICHMOND MUTUAL BANCORPORATION, INC.
(Exact name of registrant as specified in its charter)
Maryland
36-4926041
(State or other jurisdiction of incorporation of organization)
(I.R.S. Employer Identification No.)
31 North 9th StreetRichmondIndiana 47374
(Address of principal executive offices; Zip Code)
(765) 962-2581
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
RMBI
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
[  ]
Accelerated filer
[  ]
Non-accelerated filer
[X]
Smaller reporting company
[X]
Emerging growth company
[X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No [X]
There were 11,816,059 shares of Registrant’s common stock, par value of $0.01 per share, issued and outstanding as of August 12, 2022.




RICHMOND MUTUAL BANCORPORATION, INC. AND SUBSIDIARY
10-Q
TABLE OF CONTENTS
Page
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Controls and Procedures
Legal Proceedings
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Other Information
Exhibits




PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS

Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Balance Sheets
June 30,
2022
December 31,
2021
(Unaudited)
Assets
Cash and due from banks$8,603,915 $8,473,558 
Interest-bearing demand deposits5,815,221 14,564,587 
Cash and cash equivalents14,419,136 23,038,145 
Investment securities - available for sale302,632,256 357,537,845 
Investment securities - held to maturity8,143,564 9,040,825 
Loans held for sale1,120,250 557,500 
Loans and leases, net of allowance for losses of $12,381,000 and $12,108,000, respectively
891,876,871 832,846,017 
Premises and equipment, net14,009,598 14,347,088 
Federal Home Loan Bank stock9,780,900 9,992,400 
Interest receivable4,130,639 4,192,827 
Mortgage-servicing rights1,641,264 1,646,509 
Cash surrender value of life insurance3,662,559 3,619,140 
Other assets20,222,690 10,821,445 
Total assets$1,271,639,727 $1,267,639,741 
Liabilities
Noninterest-bearing deposits116,774,111 114,302,794 
Interest-bearing deposits828,558,721 785,872,606 
Total deposits945,332,832 900,175,400 
Federal Home Loan Bank advances180,000,000 180,000,000 
Advances by borrowers for taxes and insurance515,059 531,030 
Interest payable267,798 258,032 
Other liabilities6,579,282 6,193,944 
Total liabilities1,132,694,971 1,087,158,406 
Commitments and Contingent Liabilities— — 
Stockholders' Equity
Common stock, $0.01 par value
Authorized - 90,000,000 shares
Issued and outstanding - 11,848,113 shares and 12,400,195 shares at June 30, 2022 and December 31, 2021, respectively
118,481 124,002 
Additional paid-in capital106,200,912 114,339,810 
Retained earnings84,423,594 80,157,893 
Unearned employee stock ownership plan (ESOP)(12,560,701)(12,928,359)
Accumulated other comprehensive loss(39,237,530)(1,212,011)
Total stockholders' equity138,944,756 180,481,335 
Total liabilities and stockholders' equity$1,271,639,727 $1,267,639,741 
See Notes to Condensed Consolidated Statements.

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Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Interest Income
Loans and leases$10,682,371 $9,856,694 $20,948,330 $19,723,972 
Investment securities1,733,844 1,248,844 3,402,495 2,258,083 
Other31,630 6,074 39,108 12,978 
Total interest income12,447,845 11,111,612 24,389,933 21,995,033 
Interest Expense
Deposits1,274,830 1,221,389 2,523,481 2,408,661 
Borrowings624,363 700,611 1,264,186 1,394,562 
Total interest expense1,899,193 1,922,000 3,787,667 3,803,223 
Net Interest Income10,548,652 9,189,612 20,602,266 18,191,810 
Provision for losses on loans and leases200,000 530,000 400,000 930,000 
Net Interest Income After Provision for Losses on Loans and Leases10,348,652 8,659,612 20,202,266 17,261,810 
Noninterest Income
Service charges on deposit accounts248,412 198,782 482,957 393,221 
Card fee income302,013 274,688 579,783 517,203 
Loan and lease servicing fees178,071 248,738 205,939 143,288 
Net gains on securities (includes $0, $37,912, $0, and $37,912, respectively, related to accumulated other comprehensive income reclassifications) 
— 37,912 — 37,912 
Net gains on loan and lease sales221,778 569,411 464,764 1,534,228 
Other income226,202 311,174 558,395 542,464 
Total noninterest income1,176,476 1,640,705 2,291,838 3,168,316 
Noninterest Expenses
Salaries and employee benefits4,514,862 4,313,870 8,966,159 8,759,602 
Net occupancy expenses347,779 293,693 711,312 624,333 
Equipment expenses323,412 315,200 633,967 651,764 
Data processing fees567,909 562,614 1,226,824 1,088,787 
Deposit insurance expense81,000 64,000 162,000 135,000 
Printing and office supplies54,783 46,397 95,067 77,811 
Legal and professional fees335,862 288,523 683,362 635,041 
Advertising expense103,803 81,826 195,995 165,870 
Bank service charges30,957 28,996 60,758 59,747 
Real estate owned expense5,785 8,370 8,286 10,702 
Loss on sale of real estate owned847 — 847 1,278 
Other expenses790,669 875,991 1,746,910 1,647,201 
Total noninterest expenses7,157,668 6,879,480 14,491,487 13,857,136 
Income Before Income Tax Expense4,367,460 3,420,837 8,002,617 6,572,990 
Provision for income taxes (includes $0, $7,962, $0, and $7,962, respectively, related to income tax expense from reclassification of items)
882,118 639,490 1,499,683 1,229,157 
Net Income$3,485,342 $2,781,347 $6,502,934 $5,343,833 
Earnings Per Share
Basic$0.32 $0.24 $0.60 $0.46 
Diluted$0.31 $0.24 $0.58 $0.45 
See Notes to Condensed Consolidated Statements.

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Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net Income$3,485,342 $2,781,347 $6,502,934 $5,343,833 
Other Comprehensive (Loss) Income
Unrealized (loss) gain on available-for-sale securities, net of tax (benefit) expense of $(3,695,140), $437,111, $(10,108,049), and $(535,855), respectively.
(13,900,763)1,644,369 (38,025,519)(2,015,837)
Less: reclassification adjustment for realized gains included in net income, net of tax expense of $0, $7,962, $0, and $7,962, respectively.
— 29,950 — 29,950 
(13,900,763)1,614,419 (38,025,519)(2,045,787)
Comprehensive (Loss) Income$(10,415,421)$4,395,766 $(31,522,585)$3,298,046 
See Notes to Condensed Consolidated Statements.

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Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

Three Months Ended June 30, 2022
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Loss
Total
Shares
Outstanding
Amount
Balances, March 31, 202212,310,004 $123,100 $113,263,417 $82,037,495 $(12,744,530)$(25,336,767)$157,342,715 
Net income— — — 3,485,342 — — 3,485,342 
Other comprehensive loss— — — — — (13,900,763)(13,900,763)
ESOP shares earned— — 23,775 — 183,829 — 207,604 
Stock based compensation— — 383,637 — — — 383,637 
Common stock dividends ($0.10 per share)
— — — (1,099,243)— — (1,099,243)
Repurchase of common stock(461,891)(4,619)(7,469,917)— — — (7,474,536)
Balances, June 30, 202211,848,113 $118,481 $106,200,912 $84,423,594 $(12,560,701)$(39,237,530)$138,944,756 

Six Months Ended June 30, 2022
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Loss
Total
Shares
Outstanding
Amount
Balances, December 31, 202112,400,195 $124,002 $114,339,810 $80,157,893 $(12,928,359)$(1,212,011)$180,481,335 
Net income— — — 6,502,934 — — 6,502,934 
Other comprehensive loss— — — — — (38,025,519)(38,025,519)
ESOP shares earned— — 66,067 — 367,658 — 433,725 
Stock based compensation— — 763,058 — — — 763,058 
Common stock dividends ($0.20 per share)
— — — (2,237,233)— — (2,237,233)
Repurchase of common stock(552,082)(5,521)(8,968,023)— — — (8,973,544)
Balances, June 30, 202211,848,113 $118,481 $106,200,912 $84,423,594 $(12,560,701)$(39,237,530)$138,944,756 

Three Months Ended June 30, 2021
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Income
Total
Shares
Outstanding
Amount
Balances, March 31, 202113,050,996 $130,510 $122,814,920 $80,005,652 $(13,479,847)$48,399 $189,519,634 
Net income— — — 2,781,347 — — 2,781,347 
Other comprehensive income— — — — — 1,614,419 1,614,419 
ESOP shares earned— — 6,978 — 183,830 — 190,808 
Granting of restricted stock awards4,000 40 (40)— — — — 
Stock based compensation— — 527,759 — — — 527,759 
Common stock dividends ($0.57 per share)
— — — (6,829,864)— — (6,829,864)
Repurchase of common stock(370,019)(3,700)(5,231,093)— — — (5,234,793)
Balances, June 30, 202112,684,977 $126,850 $118,118,524 $75,957,135 $(13,296,017)$1,662,818 $182,569,310 





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Six Months Ended June 30, 2021
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Income
Total
Shares
Outstanding
Amount
Balances, December 31, 202013,193,760 $131,938 $124,246,425 $78,290,113 $(13,664,373)$3,708,605 $192,712,708 
Net income— — — 5,343,833 — — 5,343,833 
Other comprehensive loss— — — — — (2,045,787)(2,045,787)
ESOP shares earned— — 5,158 — 368,356 — 373,514 
Granting of restricted stock awards4,000 40 (40)— — — — 
Stock based compensation— — 1,035,383 — — — 1,035,383 
Common stock dividends ($0.64 per share)
— — — (7,676,811)— — (7,676,811)
Repurchase of common stock(512,783)(5,128)(7,168,402)— — — (7,173,530)
Balances, June 30, 202112,684,977 $126,850 $118,118,524 $75,957,135 $(13,296,017)$1,662,818 $182,569,310 

See Notes to Condensed Consolidated Statements.



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Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
20222021
Operating Activities
Net income$6,502,934 $5,343,833 
Items not requiring (providing) cash
Provision for loan losses400,000 930,000 
Depreciation and amortization531,617 576,086 
Deferred income tax(77,652)(211,032)
Stock based compensation763,058 1,035,383 
Investment securities amortization, net848,253 1,373,219 
Investment securities gains— (37,912)
Net gains on loan and lease sales(464,764)(1,534,228)
Loss on sale of real estate owned847 1,278 
Accretion of loan origination fees(889,143)(1,506,839)
Amortization of mortgage-servicing rights121,951 217,561 
ESOP shares expense433,725 373,514 
Increase in cash surrender value of life insurance(43,419)(46,311)
Loans originated for sale(20,326,065)(47,955,898)
Proceeds on loans sold20,888,815 46,572,158 
Net change in
Interest receivable62,188 352,007 
Other assets832,105 (3,375,994)
Other liabilities385,338 (4,580,426)
Interest payable9,766 (21,507)
Net cash provided by (used in) operating activities9,979,554 (2,495,108)
Investing Activities
Purchases of securities available for sale(14,949,095)(127,336,767)
Proceeds from maturities and paydowns of securities available for sale20,866,136 34,166,612 
Proceeds from sales of securities available for sale— 3,980,632 
Proceeds from maturities and paydowns of securities held to maturity891,488 2,365,016 
Net change in loans(59,439,801)(46,449,663)
Proceeds from sales of real estate owned84,652 30,270 
Purchases of premises and equipment(194,127)(124,936)
Proceeds from sale of FHLB stock 211,500 — 
Net cash used in investing activities(52,529,247)(133,368,836)
Financing Activities
Net change in
Demand and savings deposits35,671,492 62,024,795 
Certificates of deposit9,485,940 37,999,785 
Advances by borrowers for taxes and insurance(15,971)8,555 
Proceeds from FHLB advances115,000,000 80,000,000 
Repayment of FHLB advances(115,000,000)(61,000,000)
Repurchase of common stock(8,973,544)(7,173,530)
Dividends paid(2,237,233)(7,676,811)
Net cash provided by financing activities33,930,684 104,182,794 
Net Change in Cash and Cash Equivalents(8,619,009)(31,681,150)
Cash and Cash Equivalents, Beginning of Period23,038,145 48,768,457 
Cash and Cash Equivalents, End of Period$14,419,136 $17,087,307 
Additional Cash Flows and Supplementary Information
Interest paid$3,777,901 $3,824,730 
Transfers from loans to other real estate owned85,500 — 
See Notes to Condensed Consolidated Statements.

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Richmond Mutual Bancorporation, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Amounts)
Note 1: Basis of Presentation
The accompanying financial information is unaudited and has been prepared from the consolidated financial statements of Richmond Mutual Bancorporation, Inc., and its wholly owned direct and indirect subsidiaries, First Bank Richmond, First Insurance Management, Inc., and FB Richmond Holdings, Inc. References in this document to Richmond Mutual Bancorporation refer to Richmond Mutual Bancorporation, Inc. References to “we,” “us,” and “our” or the “Company” refers to Richmond Mutual Bancorporation and its wholly-owned direct and indirect subsidiaries, First Bank Richmond, First Insurance Management, Inc., FB Richmond Holdings, Inc. and FB Richmond Properties, Inc., unless the context otherwise requires.
First Bank Richmond is an Indiana state-chartered commercial bank headquartered in Richmond, Indiana and the wholly owned banking subsidiary of Richmond Mutual Bancorporation. First Bank Richmond provides full banking services through its seven full- and one limited-service offices located in Cambridge City (1), Centerville (1), Richmond (5) and Shelbyville (1), Indiana, its five full-service offices located in Piqua (2), Sidney (2) and Troy (1), Ohio, and its loan production office in Columbus, Ohio. Administrative, trust and wealth management services are conducted through First Bank Richmond's Corporate Office/Financial Center located in Richmond, Indiana. As an Indiana-chartered commercial bank, First Bank Richmond is subject to regulation by the IDFI and the FDIC.
First Insurance Management, Inc., a wholly-owned subsidiary of the Company which was formed and began operations in June 2022, is a Nevada-based captive insurance company that insures against certain risks unique to the operations of the Company and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. First Insurance Management, Inc. is subject to the regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance.
FB Richmond Holdings, Inc., a wholly-owned subsidiary of First Bank Richmond which was formed and began operations in April 2020, is a Nevada corporation that holds and manages substantially all of First Bank Richmond's investment portfolio. FB Richmond Holdings, Inc. has one active subsidiary, FB Richmond Properties, Inc., a Delaware corporation which holds loans on behalf of the Bank.
The accompanying unaudited condensed consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include information or note disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022 (SEC File No. 001-38956). However, in the opinion of management, all adjustments which are necessary for a fair presentation of the consolidated financial statements have been included. Those adjustments consist only of normal recurring adjustments. The results of operations for the period are not necessarily indicative of the results to be expected for the full year.
Loans
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.
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

7


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.
When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan.  Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months.
Note 2: Accounting Pronouncements
In March 2020, the novel coronavirus disease of 2019 ("COVID-19") was identified as a global pandemic and began affecting the health of large populations around the world. As a result of the spread of COVID-19, economic uncertainties arose which can ultimately affect the financial position, results of operations and cash flows of the Company, as well as the Company's customers. In response to economic concerns over COVID-19, in March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was passed into law by the U.S. Congress. The CARES Act included relief for individual Americans, health care workers, small businesses and certain industries hit hard by the COVID-19 pandemic. The 2021 Consolidated Appropriations Act, passed by Congress in December 2020, extended certain provisions of the CARES Act affecting the Company into 2022.
The CARES Act included several provisions designed to help financial institutions like the Company in working with their customers. Section 4013 of the CARES Act, as extended, allows a financial institution to elect to suspend generally accepted accounting principles and regulatory determinations with respect to qualifying loan modifications related to COVID-19 that would otherwise be categorized as a troubled debt restructuring ("TDR") until January 1, 2022. The Company has taken advantage of this provision to extend certain payment modifications to loan customers in need. As of June 30, 2022 the Company had no loans outstanding that were modified under the CARES Act guidance.
The CARES Act also approved the Paycheck Protection Program ("PPP"), administered by the Small Business Administration ("SBA") with funding provided by financial institutions. The 2021 Consolidated Appropriations Act approved a new round of PPP loans in 2021. The PPP provides loans to eligible businesses through financial institutions like First Bank Richmond, with loans being eligible for forgiveness of some or all of the principal amount by the SBA if the borrower meets certain requirements. The SBA guarantees repayment of the loans if the borrower's loan is not forgiven and is then not repaid by the member. The Company earns a 1% interest rate on PPP loans, plus a processing fee from the SBA for processing and originating a loan. The Company originated $38.2 million in PPP loans during 2021, of which $3.7 million were outstanding at June 30, 2022.
The Jumpstart Our Business Startups Act (the "JOBS Act"), enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as and has elected to be an emerging growth company under the JOBS Act. An emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. The Company has elected to comply with new or amended accounting pronouncements in the same manner as a private company.
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326). The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit

8


losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.
In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief”. This ASU provides transition relief for entities adopting the FASB’s credit losses standard, ASU 2016-13 and allows companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for certain financial instruments. In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”. ASU No. 2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. In October 2019, the FASB voted to extend the implementation of ASU No. 2016-13 for certain financial institutions including smaller reporting companies. As a result, ASU 2016-13 will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is evaluating its current expected credit loss ("CECL") methodology on the loan and investment portfolios to identify the necessary modifications in accordance with ASU 2016-13. A CECL implementation team consisting of management from multiple areas of the Company have been involved in evaluating loss estimation methods and application of these methods to the specific segments and subsegments of the loan portfolio. Management has been actively monitoring FASB developments and evaluating the use of the different methods allowed. Due to continuing development of our methodology, additional time is required to quantify the effect of CECL on the Company's Consolidated Financial Statements. The Company continues to refine its modeling and will finalize a method or methods of adoption in time for the effective date.
In March 2022 the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU eliminates the accounting guidance for troubled debt restructured loans (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, the ASU requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. This ASU will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, upon the Company’s adoption of the amendments in ASU 2016-13, which is commonly referred to as the current expected credit loss methodology.

In March 2020, the FASB issued ASU No. 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 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. This ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not expect the adoption of ASU No. 2020-04 to have a material impact on its consolidated financial statements.
In October 2020, the FASB issued ASU No. 2020-08, “Receivables – Nonrefundable Fees and Other Costs”. ASU No. 2020-08 clarifies that the Company should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. ASU No. 2020-08 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of ASU No. 2020-08 did not have a material impact on the Company's consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU No. 2019-12 provides that state franchise or similar taxes that are based, at least in part on an entity’s income, be included in an entity’s income tax recognized as income-based taxes. The ASU further clarifies that the effect of any change in tax laws or rates used in the computation of the annual effective tax rate are required to be reflected in the first interim period that includes the enactment date of the legislation. Technical changes to eliminate exceptions to Topic 740 related to intra-period tax allocations for entities with losses from continuing operations, deferred tax liabilities related to change in ownership of foreign entities, and interim-period tax allocations for businesses with losses where the losses are expected to be realized. The amendments in ASU No. 2019-12 are effective for public business entities with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted ASU No. 2019-12 on January 1, 2021. The adoption of ASU No. 2019-12 did not have a material impact on the Company's consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU contains some technical adjustments related to the fair value disclosure requirements of public companies. Included in this ASU is the additional disclosure requirement of unrealized

9


gains and losses for the period in recurring level 3 fair value disclosures and the range and weighted average of significant unobservable inputs, among other technical changes. The Company adopted ASU No. 2018-13 on January 1, 2020. The adoption of ASU No. 2018-13 did not have a material impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees are required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. For the Company, the amendments in this update became effective for annual periods and interim periods within those annual periods beginning after December 15, 2021. The Company adopted the amendments to ASU No. 2016-02 on January 1, 2022. The adoption of the amendments did not have a material impact on the Company's consolidated financial statements.

Note 3: Investment Securities
The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:
June 30, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Available for sale
U.S. treasury securities$395 $— $— $395 
SBA Pools7,636 456 7,184 
Federal agencies15,000 — 1,683 13,317 
State and municipal obligations169,853 17 30,669 139,201 
Mortgage-backed securities - government-sponsored enterprises (GSE) residential147,915 — 16,173 131,742 
Corporate obligations11,500 715 10,793 
352,299 29 49,696 302,632 
Held to maturity
State and municipal obligations8,144 29 31 8,142 
8,144 29 31 8,142 
Total investment securities$360,443 $58 $49,727 $310,774 

December 31, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Available for sale
SBA Pools$8,691 $29 $107 $8,613 
Federal agencies15,000 — 274 14,726 
State and municipal obligations166,489 2,261 1,298 167,452 
Mortgage-backed securities - government-sponsored enterprises (GSE) residential164,629 712 2,831 162,510 
Corporate obligations4,250 28 4,224 
Equity securities13 — — 13 
359,072 3,004 4,538 357,538 
Held to maturity
State and municipal obligations9,041 147 9,186 
9,041 147 9,186 
Total investment securities$368,113 $3,151 $4,540 $366,724 

10


The amortized cost and fair value of securities at June 30, 2022, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Available for SaleHeld to Maturity
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Within one year$1,670 $1,675 $1,195 $1,197 
One to five years11,449 11,030 4,860 4,853 
Five to ten years42,236 39,470 1,199 1,202 
After ten years149,029 118,715 890 890 
204,384 170,890 8,144 8,142 
Mortgage-backed securities –GSE residential147,915 131,742 — — 
Totals$352,299 $302,632 $8,144 $8,142 
Securities with a carrying value of $125,890,000 and $136,463,000 were pledged at June 30, 2022 and December 31, 2021, respectively, to secure certain deposits and for other purposes as permitted or required by law.
There were no sales of securities available for sale for the three and six months ended June 30, 2022. Proceeds from sales of securities available for sale for both the three and six months ended June 30, 2021 were $3,981,000. Gross gains were recognized on the sale of securities available-for-sale for the three and six months ended June 30, 2021 of $38,000. There were no gross losses recognized on the sale of securities available for sale for the three and six months ended June 30, 2021.
Certain investments in debt securities, as reflected in the table below, are reported in the condensed consolidated financial statements and notes at an amount less than their historical cost.  Total fair value of these investments at June 30, 2022 and December 31, 2021 was $297,776,000 and $223,842,000, respectively, which is approximately 96% and 61% of the Company’s aggregated available-for-sale and held-to-maturity investment portfolio at those dates, respectively.  These declines primarily resulted from changes in market interest rates since their purchase.
Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary.
Should the impairment of any other securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.
The following tables show the Company’s investments by gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2022 and December 31, 2021:

11


Description of
Securities
June 30, 2022
Less Than 12 Months12 Months or MoreTotal
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Available-for-sale
SBA Pools$2,236 $162 $4,249 $294 $6,485 $456 
Federal agencies8,913 1,087 4,404 596 13,317 1,683 
State and municipal obligations114,361 23,783 21,451 6,886 135,812 30,669 
Mortgage-backed securities - GSE residential101,424 10,974 29,962 5,199 131,386 16,173 
Corporate obligations8,035 715 — — 8,035 715 
Total available-for-sale234,969 36,721 60,066 12,975 295,035 49,696 
Held-to-maturity
State and municipal obligations2,741 31 — — 2,741 31 
Total temporarily impaired securities$237,710 $36,752 $60,066 $12,975 $297,776 $49,727 

Description of
Securities
December 31, 2021
Less Than 12 Months12 Months or MoreTotal
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Available-for-sale
SBA Pools$2,838 $81 $3,214 $26 $6,052 $107 
Federal agencies14,726 274 — — 14,726 274 
State and municipal obligations74,235 1,044 7,809 254 82,044 1,298 
Mortgage-backed securities - GSE residential111,104 2,576 6,523 255 117,627 2,831 
Corporate obligations2,972 28 — — 2,972 28 
Total available-for-sale205,875 4,003 17,546 535 223,421 4,538 
Held-to-maturity
State and municipal obligations421 — — 421 
Total temporarily impaired securities$206,296 $4,005 $17,546 $535 $223,842 $4,540 
Federal Agency Obligations.  The unrealized losses on the Company’s investments in direct obligations of U.S. federal agencies 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.  Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2022.
SBA Pools and Mortgage-Backed Securities - GSE Residential.  The unrealized losses on the Company’s investment in mortgage-backed securities and SBA pools were caused by interest rate changes and illiquidity.  The Company expects to recover the amortized cost basis over the term of the securities.  Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2022.
State, Municipal, and Corporate Obligations.  The unrealized losses on the Company’s investments in securities of state and municipal obligations were caused by interest rate changes and illiquidity.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments.  Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments

12


before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2022.
Note 4: Loans, Leases and Allowance
The following table shows the composition of the loan and lease portfolio at June 30, 2022 and December 31, 2021:
June 30,
2022
December 31,
2021
Commercial mortgage$278,490 $261,202 
Commercial and industrial106,427 99,682 
Construction and development104,832 93,678 
Multi-family121,424 107,421 
Residential mortgage135,486 134,155 
Home equity9,347 7,146 
Direct financing leases130,859 126,762 
Consumer18,229 15,905 
905,094 845,951 
Less
Allowance for loan and lease losses12,381 12,108 
Deferred loan fees836 997 
$891,877 $832,846 
The following tables present the activity in the allowance for loan and lease losses for the three and six months ended June 30, 2022 and 2021:
Balance, beginning of periodProvision (credit) for lossesCharge-offsRecoveriesBalance, end of period
Three Months Ended June 30, 2022:
Commercial mortgage$4,730 $40 $— $34 $4,804 
Commercial and industrial1,557 (75)— 22 1,504 
Construction and development2,434 (11)— — 2,423 
Multi-family2,032 14 — — 2,046 
Residential mortgage263 (80)— 13 196 
Home equity35 (1)— — 34 
Leases1,064 256 (189)1,139 
Consumer202 57 (30)235 
Total$12,317 $200 $(219)$83 $12,381 
Six Months Ended June 30, 2022:
Commercial mortgage$4,742 $21 $— $41 $4,804 
Commercial and industrial1,639 (172)— 37 1,504 
Construction and development2,286 137 — — 2,423 
Multi-family1,875 171 — — 2,046 
Residential mortgage263 (86)— 19 196 
Home equity29 — — 34 
Leases1,079 241 (199)18 1,139 
Consumer195 83 (54)11 235 
Total$12,108 $400 $(253)$126 $12,381 



13


Balance, beginning of periodProvision (credit) for lossesCharge-offsRecoveriesBalance, end of period
Three Months Ended June 30, 2021:
Commercial mortgage$4,426 $160 $— $$4,592 
Commercial and industrial2,238 (316)(3)31 1,950 
Construction and development1,728 206 — — 1,934 
Multi-family1,042 311 — — 1,353 
Residential mortgage328 (10)— 51 369 
Home equity19 — — 23 
Leases1,029 70 (171)85 1,013 
Consumer149 105 (64)197 
Total$10,959 $530 $(238)$180 $11,431 
Six Months Ended June 30, 2021:
Commercial mortgage$4,628 $(48)$— $12 $4,592 
Commercial and industrial2,270 (366)(3)49 1,950 
Construction and development1,068 866 — — 1,934 
Multi-family1,039 314 — — 1,353 
Residential mortgage324 (12)— 57 369 
Home equity18 — — 23 
Leases1,054 145 (365)179 1,013 
Consumer185 26 (75)61 197 
Total$10,586 $930 $(443)$358 $11,431 

The following tables present the balance in the allowance for loan and lease losses and the recorded investment in loans and leases based on portfolio segment and impairment method as of June 30, 2022 and December 31, 2021:

Allowance for loan and lease losses:Loans and leases:
Individually evaluated for impairmentCollectively evaluated for impairmentBalanceIndividually evaluated for impairmentCollectively evaluated for impairmentBalance
As of June 30, 2022:
Commercial mortgage$— $4,804 $4,804 $— $278,490 $278,490 
Commercial and industrial297 1,207 1,504 972 105,455 106,427 
Construction and development750 1,673 2,423 4,900 99,932 104,832 
Multi-family— 2,046 2,046 — 121,424 121,424 
Residential mortgage— 196 196 116 135,370 135,486 
Home equity— 34 34 — 9,347 9,347 
Leases— 1,139 1,139 — 130,859 130,859 
Consumer— 235 235 — 18,229 18,229 
Total$1,047 $11,334 $12,381 $5,988 $899,106 $905,094 




14


Allowance for loan and lease losses:Loans and leases:
Individually evaluated for impairmentCollectively evaluated for impairmentBalanceIndividually evaluated for impairmentCollectively evaluated for impairmentBalance
As of December 31, 2021:
Commercial mortgage$— $4,742 $4,742 $128 $261,074 $261,202 
Commercial and industrial299 1,340 1,639 995 98,687 99,682 
Construction and development750 1,536 2,286 4,900 88,778 93,678 
Multi-family— 1,875 1,875 — 107,421 107,421 
Residential mortgage— 263 263 119 134,036 134,155 
Home equity— 29 29 — 7,146 7,146 
Leases— 1,079 1,079 — 126,762 126,762 
Consumer— 195 195 — 15,905 15,905 
Total$1,049 $11,059 $12,108 $6,142 $839,809 $845,951 
The Company rates all loans and leases by credit quality using the following designations:
Grade 1 – Exceptional
Exceptional loans and leases are top-quality loans to individuals whose financial credentials are well known to the Company. These loans and leases have excellent sources of repayment, are well documented and/or virtually free of risk (i.e., CD secured loans).
Grade 2 – Quality Loans and Leases
These loans and leases 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 (“IDFI”) 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 and leases.  These loans and leases have adequate sources of repayment with little identifiable risk of collection and they conform to Company policy and IDFI/FDIC regulations.
Grade 4 – Acceptable but Monitored
Loans and leases 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 and leases 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 and leases 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 lease or in the Company’s credit position at some future date.  Special Mention loans and leases are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.  This special mention rating is designed to identify a specific level of risk and concern about an asset’s quality.  Although a special mention loan or leases has a higher probability of default than a pass rated loan or lease, its default is not imminent.
Grade 6 – Substandard
Loans and leases 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 and leases 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.

15


Substandard loans and leases have a high probability of payment default, or they have other well-defined weaknesses.  Such loans and leases have a distinct potential for loss; however, an individual loan’s or lease’s potential for loss does not have to be distinct for the loan or lease to be rated substandard.
The following are examples of situations that might cause a loan or lease to be graded a “6”:
Cash flow deficiencies (losses) jeopardize future loan or lease payments.
Sale of non-collateral assets has become a primary source of loan or lease 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 or lease repayment.
The borrower is bankrupt or for any other reason future repayment is dependent on court action.
Grade 7 – Doubtful
A loan or lease 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 or lease 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 and leases.
Grade 8 – Loss
Loans and leases classified loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan or lease even though partial recovery may be effected in the future.
No material changes have been made to the risk characteristics pertaining to the loan and lease portfolio contained in the Company's 2021 Form 10-K.
The following tables present the credit risk profile of the Company’s loan and lease portfolio based on rating category and payment activity as of June 30, 2022 and December 31, 2021:

PassSpecial MentionSubstandardDoubtfulLossTotal
As of June 30, 2022:
Commercial mortgage$274,372 $4,118 $— $— $— $278,490 
Commercial and industrial98,167 6,928 1,332 — — 106,427 
Construction and development99,932 — 4,900 — — 104,832 
Multi-family121,424 — — — — 121,424 
Residential mortgage133,623 — 1,863 — — 135,486 
Home equity9,282 — 65 — — 9,347 
Leases130,581 193 49 36 — 130,859 
Consumer18,123 — 106 — — 18,229 
Total$885,504 $11,239 $8,315 $36 $— $905,094 




16


PassSpecial MentionSubstandardDoubtfulLossTotal
As of December 31, 2021:
Commercial mortgage$256,043 $5,031 $128 $— $— $261,202 
Commercial and industrial91,082 7,191 1,409 — — 99,682 
Construction and development88,778 — 4,900 — — 93,678 
Multi-family107,421 — — — — 107,421 
Residential mortgage132,223 — 1,932 — — 134,155 
Home equity7,097 — 49 — — 7,146 
Leases126,707 — 13 42 — 126,762 
Consumer15,883 — 22 — — 15,905 
Total$825,234 $12,222 $8,453 $42 $— $845,951 

The following tables present the Company’s loan and lease portfolio aging analysis of the recorded investment in loans and leases as of June 30, 2022 and December 31, 2021:
June 30, 2022
Delinquent Loans and LeasesCurrentTotal
Portfolio
Loans and
Leases
Total Loans
and Leases
> 90 Days
Accruing
30-59 Days
Past Due
60-89 Days
Past Due
90 Days and
Over
Total Past
Due
Commercial mortgage$28 $— $— $28 $278,462 $278,490 $— 
Commercial and industrial— 67 367 434 105,993 106,427 — 
Construction and development785 — 4,900 5,685 99,147 104,832 — 
Multi-family— — — — 121,424 121,424 — 
Residential mortgage537 460 1,980 2,977 132,509 135,486 1,865 
Home equity38 — 31 69 9,278 9,347 31 
Leases101 16 49 166 130,693 130,859 49 
Consumer107 18 106 231 17,998 18,229 106 
Totals$1,596 $561 $7,433 $9,590 $895,504 $905,094 $2,051 

December 31, 2021
Delinquent Loans and LeasesCurrentTotal
Portfolio
Loans and
Leases
Total Loans
and Leases
> 90 Days
Accruing
30-59 Days
Past Due
60-89 Days
Past Due
90 Days and
Over
Total Past
Due
Commercial mortgage$29 $— $128 $157 $261,045 $261,202 $— 
Commercial and industrial33 579 366 978 98,704 99,682 — 
Construction and development55 96 4,900 5,051 88,627 93,678 — 
Multi-family— — — — 107,421 107,421 — 
Residential mortgage710 174 1,932 2,816 131,339 134,155 1,813 
Home equity131 — 12 143 7,003 7,146 12 
Leases144 82 — 226 126,536 126,762 — 
Consumer59 30 22 111 15,794 15,905 22 
Totals$1,161 $961 $7,360 $9,482 $836,469 $845,951 $1,847 


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The following tables present the Company’s impaired loans and specific valuation allowance at June 30, 2022 and December 31, 2021:
June 30, 2022
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
Impaired loans without a specific valuation allowance
Commercial and industrial$367 $566 $— 
Residential mortgage116 242 — 
$483 $808 $— 
Impaired loans with a specific valuation allowance
Commercial and industrial$605 $647 $297 
Construction and development4,900 4,900 750 
$5,505 $5,547 $1,047 
Total impaired loans
Commercial and industrial$972 $1,213 $297 
Construction and development4,900 4,900 750 
Residential mortgage116 242 — 
Total impaired loans$5,988 $6,355 $1,047 

December 31, 2021
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
Impaired loans without a specific valuation allowance
Commercial mortgage$128 $199 $— 
Commercial and industrial367 566 — 
Residential mortgage119 244 — 
$614 $1,009 $— 
Impaired loans with a specific valuation allowance
Commercial and industrial$628 $658 $299 
Construction and development4,900 4,900 750 
$5,528 $5,558 $1,049 
Total impaired loans
Commercial mortgage$128 $199 $— 
Commercial and industrial995 1,224 299 
Construction and development4,900 4,900 750 
Residential mortgage119 244 — 
Total impaired loans$6,142 $6,567 $1,049 



The following tables present the Company’s average investment in impaired loans and leases, and interest income recognized for the three and six months ended June 30, 2022 and 2021:


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Average
Investment in
Impaired
Loans and Leases
Interest
Income
Recognized
Three Months Ended June 30, 2022:
Total impaired loans
Commercial mortgage$58 $— 
Commercial and industrial975 
Construction and development4,900 — 
Residential mortgage116 
Total impaired loans and leases$6,049 $
Average
Investment in
Impaired
Loans and Leases
Interest
Income
Recognized
Six Months Ended June 30, 2022:
Total impaired loans
Commercial mortgage$81 $12 
Commercial and industrial982 12 
Construction and development4,900 — 
Residential mortgage117 
Total impaired loans and leases$6,080 $26 
Average
Investment in
Impaired
Loans and Leases
Interest
Income
Recognized
Three Months Ended June 30, 2021:
Total impaired loans
Commercial mortgage$138 $10 
Commercial and industrial1,041 
Construction and development4,900 — 
Residential mortgage178 
Total impaired loans and leases$6,257 $12 
Average
Investment in
Impaired
Loans and Leases
Interest
Income
Recognized
Six Months Ended June 30, 2021:
Total impaired loans
Commercial mortgage$118 $10 
Commercial and industrial1,066 11 
Construction and development3,267 — 
Residential mortgage179 
Total impaired loans and leases$4,630 $24 

The following table presents the Company’s nonaccrual loans and leases at June 30, 2022 and December 31, 2021:


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June 30,
2022
December 31,
2021
Commercial mortgage$— $128 
Commercial and industrial972 995 
Construction4,900 4,900 
Residential mortgage116 119 
Leases36 42 
$6,024 $6,184 
During the three and six months ended June 30, 2022 and 2021, there were no newly classified TDRs. For the three and six months ended June 30, 2022 and 2021, the Company recorded no charge-offs related to TDRs. As of June 30, 2022 and December 31, 2021, TDRs had a related allowance of $47,000 and $49,000, respectively. During the three and six months ended June 30, 2022, there were no TDRs for which there was a payment default within the first 12 months of the modification.
The CARES Act provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current under the CARES Act if they are less than 30 days past due on their contractual payments at the time a modification program is implemented.
In March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic. As of June 30, 2022, the Company had no loan and lease modifications outstanding related to the COVID-19 pandemic in accordance with the CARES Act.
At June 30, 2022 and December 31, 2021, the balance of real estate owned included $0 and $27,000, respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.  At June 30, 2022 and December 31, 2021, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $1.1 million and $885,000, respectively.
The following lists the components of the net investment in direct financing leases:
June 30,
2022
December 31,
2021
Total minimum lease payments to be received$143,895 $140,214 
Initial direct costs7,920 7,035 
151,815 147,249 
Less: Unearned income(20,956)(20,487)
Net investment in direct finance leases$130,859 $126,762 
There were no leases serviced by the Company for the benefit of others at June 30, 2022 and December 31, 2021. Certain leases have been sold from time to time by the Company with partial recourse. The Company estimates and records its obligation based upon historical loss percentages. At both June 30, 2022 and December 31, 2021, the Company did not have any recorded recourse obligations on leases sold.
The following table summarizes the future minimum lease payments receivable subsequent to June 30, 2022:


20


Remainder of 2022$28,267 
202347,122 
202434,815 
202521,321 
202610,461 
Thereafter1,909 
$143,895 

Note 5: Fair Value 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 that 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 June 30, 2022 and December 31, 2021:
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)
June 30, 2022
Available-for-sale securities
U.S. Treasury securities$395 $— $395 $— 
SBA Pools7,184 — 7,184 — 
Federal agencies13,317 — 13,317 — 
State and municipal obligations139,201 — 139,201 — 
Mortgage-backed securities - GSE residential131,742 — 131,742 — 
Corporate obligations10,793 — 10,793 — 
$302,632 $— $302,632 $— 


21


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, 2021
Available-for-sale securities
SBA Pools$8,613 $— $8,613 $— 
Federal agencies14,726 — 14,726 — 
State and municipal obligations167,452 — 167,452 — 
Mortgage-backed securities - GSE residential162,510 — 162,510 — 
Corporate obligations4,224 — 4,224 — 
Equity securities13 13 — — 
$357,538 $13 $357,525 $— 

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 six months ended June 30, 2022.
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, and mortgage-backed securities. Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.
Nonrecurring Measurements
The following table presents the fair value measurement of assets and liabilities measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022 and December 31, 2021:

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)
June 30, 2022
Impaired loans, collateral dependent$308 $— $— $308 
Mortgage-servicing rights1,641 — — 1,641 
December 31, 2021
Impaired loans, collateral dependent$4,587 $— $— $4,587 
Mortgage-servicing rights1,647 — — 1,647 


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Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.  For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.
Collateral-Dependent Impaired Loans, Net of ALLL
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.  Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by management.  Appraisals are reviewed for accuracy and consistency by management.  Appraisers are selected from the list of approved appraisers maintained by management.  The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral.  These discounts and estimates are developed by management by comparison to historical results.
Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment.  Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.
Mortgage-Servicing Rights
Mortgage-servicing rights do not trade in an active, open market with readily observable prices.  Accordingly, fair value is estimated using discounted cash flow models having significant inputs of discount rate, prepayment speed and default rate.  Due to the nature of the valuation inputs, mortgage-servicing rights are classified within Level 3 of the hierarchy.
Mortgage-servicing rights are tested for impairment on a quarterly basis based on an independent valuation.  The valuation is reviewed by management for accuracy and for potential impairment.
Unobservable (Level 3) Inputs
The following tables present the fair value measurement of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022 and December 31, 2021:
Fair Value at June 30,
2022
Valuation
Technique
Unobservable
Inputs
Range
Collateral-dependent impaired loans$308 AppraisalMarketability discount
0 - 43%
Mortgage-servicing rights$1,641 Discounted cash flowDiscount rate10%

Fair Value at December 31,
2021
Valuation
Technique
Unobservable
Inputs
Range
Collateral-dependent impaired loans$4,587 AppraisalMarketability discount
0 - 39%
Mortgage-servicing rights$1,647 Discounted cash flowDiscount rate10%
Fair Value of Financial Instruments
The following tables present estimated fair values of the Company’s financial instruments at June 30, 2022 and December 31, 2021:

23


Fair Value Measurements Using
Carrying
Value
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
June 30, 2022
Financial assets
Cash and cash equivalents$14,419 $14,419 $— $— 
Available-for-sale securities302,632 — 302,632 — 
Held-to-maturity securities8,144 — 8,142 — 
Loans held for sale1,120 — — 1,063 
Loans and leases receivable, net891,877 — — 866,754 
Federal Reserve and FHLB stock9,781 — 9,781 — 
Interest receivable4,131 — 4,131 — 
Financial liabilities
Deposits945,333 — 941,055 — 
FHLB advances180,000 — 180,171 — 
Interest payable268 — 268 — 

Fair Value Measurements Using
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, 2021
Financial assets
Cash and cash equivalents$23,038 $23,038 $— $— 
Available-for-sale securities357,538 13 357,525 — 
Held-to-maturity securities9,041 — 9,186 — 
Loans held for sale558 — — 555 
Loans and leases receivable, net832,846 — — 833,975 
Federal Reserve and FHLB stock9,992 — 9,992 — 
Interest receivable4,193 — 4,193 — 
Financial liabilities
Deposits900,175 — 900,528 — 
FHLB advances180,000 — 185,065 — 
Interest payable258 — 258 — 
Note 6: Earnings per Share
Basic 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:

24


Three Months Ended June 30, 2022Three Months Ended June 30, 2021
Net income$3,485 $2,781 
Shares outstanding for Basic EPS:
Average shares outstanding12,048,477 12,896,773 
Less: average restricted stock award shares not vested347,438 434,544 
Less: average unearned ESOP Shares937,679 991,785 
Shares outstanding for Basic EPS10,763,360 11,470,444 
Additional Dilutive Shares361,612 259,833 
Shares outstanding for Diluted EPS11,124,972 11,730,277 
Basic Earnings Per Share$0.32 $0.24 
Diluted Earnings Per Share$0.31 $0.24 

Six Months Ended June 30, 2022Six Months Ended June 30, 2021
Net income$6,503 $5,344 
Shares outstanding for Basic EPS:
Average shares outstanding12,196,976 13,009,766 
Less: average restricted stock award shares not vested347,914 433,031 
Less: average unearned ESOP Shares944,405 998,511 
Shares outstanding for Basic EPS10,904,657 11,578,224 
Additional Dilutive Shares395,650 212,869 
Shares outstanding for Diluted EPS11,300,307 11,791,093 
Basic Earnings Per Share$0.60 $0.46 
Diluted Earnings Per Share$0.58 $0.45 

Note 7: 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 six percent of base salary contributed by participants. The Company’s expense for the plan was $55,000, $108,000, $64,000, and $116,000 for the three and six months ended June 30, 2022 and 2021, respectively.
Employee Stock Ownership Plan
As part of the reorganization and related stock offering, the Company established an Employee Stock Ownership Plan, or ESOP, covering substantially all employees. The ESOP acquired 1,082,130 shares of Company common stock at an average price of $13.59 per share on the open market with funds provided by a loan from the Company. Dividends on unallocated shares used to repay the loan for the Company are recorded as a reduction of the loan or accrued interest, as applicable. Dividends on allocated shares paid to participants are reported as compensation expense.  Unearned ESOP shares which have not yet been allocated to ESOP participants are excluded from the computation of average shares outstanding for earnings per share calculation. Accordingly, $12,560,701 and $12,928,359 of common stock acquired by the ESOP was shown as a

25


reduction of stockholders’ equity at June 30, 2022 and December 31, 2021, respectively. Shares are released to participants proportionately as the loan is repaid.
ESOP expense for the three and six months ended June 30, 2022 and 2021 was $208,000, $191,000, $434,000, and $374,000, respectively.
June 30,
2022
December 31,
2021
Earned ESOP shares157,829 130,775 
Unearned ESOP shares924,301 951,355 
Total ESOP shares1,082,130 1,082,130 
Quoted per share price$13.98 $16.05 
Fair value of earned shares$2,206 $2,099 
Fair value of unearned shares$12,922 $15,269 

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 during the six months ended June 30, 2022.
Six Months Ended June 30, 2022
Number of Restricted SharesWeighted Average Grant Date Fair Value
Non-vested, beginning of period348,395$10.56 
Granted— 
Vested(87,104)10.56 
Forfeited— 
Non-vested, June 30, 2022261,29110.56 
Total compensation cost recognized in the income statement for restricted stock awards during the three and six months ended June 30, 2022 was $229,000 and $456,000, respectively, and the related tax benefit recognized was $48,000 and $96,000, respectively. As of June 30, 2022, unrecognized compensation expense related to restricted stock awards was $2.8 million.
Stock Option Plan. On October 1, 2020, the Company awarded options to purchase 1,095,657 of common stock under the 2020 EIP with an exercise price of $10.53 per share, the fair value of a share of the Company's common stock on the date of 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 a share of the Company's common stock on the date of the grant, to eligible participants. These options awarded vest in five equal annual installments with the first vesting occurring on

26


June 30, 2021. Forfeited options may be awarded to other eligible recipients in future grants until the 2020 EIP terminates in September 2030.
The following table summarizes the stock option activity in the 2020 EIP during the six months ended June 30, 2022.
Six Months Ended June 30, 2022
Number of SharesWeighted-Average Exercise Price
Balance at beginning of period1,050,961$10.56 
Granted— 
Exercised— 
Forfeited/expired— 
Balance, June 30, 20221,050,96110.56 
Exercisable at end of period413,120$10.56 

The fair value of options granted is estimated on the date of the grant using a Black Scholes model with the following assumptions:
April 1, 2021
Dividend yields1.90 %
Volatility factors of expected market price of common stock26.98 %
Risk-free interest rates1.16 %
Expected life of options6.1 years

A summary of the status of the Company stock option shares as of June 30, 2022 is presented below.
SharesWeighted Average Grant Date Fair Value
Non-vested, beginning of year850,458$2.91 
Vested(212,617)— 
Granted— 
Forfeited— 
Non-vested, June 30, 2022637,841$2.91 

Total compensation cost recognized in the income statement for option-based payment arrangements for the three and six months ended June 30, 2022 was $154,000 and $307,000, respectively, and the related tax benefit recognized was $17,000 and $34,000, respectively. As of June 30, 2022, unrecognized compensation expense related to the stock option awards was $1.9 million.

Note 8: Subsequent Event
Subsequent to June 30, 2022 through August 12, 2022, the Company purchased 32,054 shares of the Company's common stock pursuant to its existing stock repurchase programs, leaving 1,154,209 shares available for future repurchase.

27


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Management’s discussion and analysis of financial condition of the Richmond Mutual Bancorporation, Inc. (the “Company”) at June 30, 2022, and the consolidated results of operations for the three and six month periods ended June 30, 2022, compared to the same periods in 2021, is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this Form 10-Q.
The terms “we,” “our,” “us,” or the “Company” refer to Richmond Mutual Bancorporation, Inc. and its consolidated direct and indirect subsidiaries, First Bank Richmond, which we sometimes refer to as the “Bank”, First Insurance Management, Inc., FB Richmond Holdings, Inc. and FB Richmond Properties, Inc., unless the context otherwise requires.
Cautionary Note Regarding Forward-Looking Statements
Certain matters in this Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of words such as “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.”   These forward-looking statements include, but are not limited to:
statements of our goals, intentions and expectations;
statements regarding our business plans, prospects, growth and operating strategies;
statements regarding the quality of our loan and investment portfolios; and
estimates of our risks and future costs and benefits.
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made.  These forward-looking statements are based on our current beliefs and expectations and, by their nature, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
Important factors that could cause our actual results to differ materially from the results anticipated or projected, include, but are not limited to, the following:
potential adverse impacts to economic conditions in the Company's local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, generally, resulting from the novel coronavirus disease 2019 (“COVID-19") pandemic and any governmental or societal responses thereto;
supply chain disruptions due to COVID-19 employee absences, as well as the ongoing war in Ukraine, could adversely impact the ability of our borrowers to manage their cash flow and ultimately to repay their loans;
changes in economic conditions, either nationally or in our market area;
general economic conditions, either nationally or in our market areas, that are worse than expected;
changes in the level and direction of loan or lease delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan and lease losses;
our ability to access cost-effective funding;
fluctuations in real estate values, and residential, commercial, and multifamily real estate market conditions;

28


demand for loans and deposits in our market area;
our ability to implement and change our business strategies;
competition among depository and other financial institutions and equipment financing companies;
the impact and intended termination of our frozen defined benefit plan;
inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans and leases we have made and make;
adverse changes in the securities or secondary mortgage markets;
changes in the quality or composition of our loan, lease or investment portfolios;
our ability to keep pace with technological changes, including our ability to identify and address cyber-security risks such as data security breaches, "denial of service" attacks, "hacking" and identity theft, and other attacks on our information technology systems or on the third-party vendors who perform several of our critical processing functions;
the inability of third-party providers to perform as expected;
our ability to manage market risk, credit risk and operational risk in the current economic environment;
our ability to enter new markets successfully and capitalize on growth opportunities;
our ability to retain key employees;
our compensation expense associated with equity allocated or awarded to our employees;
changes in the financial condition, results of operations or future prospects of issuers of securities that we own;
our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;
changes in consumer spending, borrowing and savings habits;
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission ("SEC") or the Public Company Accounting Oversight Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods;
legislative or regulatory changes that adversely affect our business, including as a result of COVID-19, and the availability of resources to address such changes;
our ability to pay dividends on our common stock;
other economic, competitive, governmental, regulatory, and technical factors affecting our operations, pricing, products and services; and
the other risks detailed in this report and from time to time in our other filings with the Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”).
We undertake no obligation to publicly update or revise any forward-looking statements included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new

29


information, future events or otherwise.  In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements.

Overview
The Company, a Maryland corporation, is a bank holding company for its wholly owned subsidiary, First Bank Richmond. Substantially all of the Company's business is conducted through First Bank Richmond. The Company is regulated by the Board of Governors of the Federal Reserve System (the “FRB”) and the Indiana Department of Financial Institutions ("IDFI"). The Company's corporate office is located at 31 North 9th Street, Richmond, Indiana, and its telephone number is (765) 962-2581.
First Bank Richmond is an Indiana state-chartered commercial bank headquartered in Richmond, Indiana. The Bank was originally established in 1887 as an Indiana state-chartered mutual savings and loan association and in 1935 converted to a federal mutual savings and loan association, operating under the name First Federal Savings and Loan Association of Richmond. In 1993, the Bank converted to a state-chartered mutual savings bank and changed its name to First Bank Richmond, S.B. In 1998, the Bank, in connection with its non-stock mutual holding company reorganization, converted to a national bank charter operating as First Bank Richmond, National Association. In July 2007, Richmond Mutual Bancorporation-Delaware, the Bank’s then current holding company, acquired Mutual Federal Savings Bank headquartered in Sidney, Ohio.  Mutual Federal Savings Bank was operated independently as a separately chartered, wholly owned subsidiary of Richmond Mutual Bancorporation-Delaware until 2016 when it was combined with the bank through an internal merger transaction that consolidated both banks into a single, more efficient commercial bank charter. In 2017, the Bank converted to an Indiana state-chartered commercial bank and changed its name to First Bank Richmond. The former Mutual Federal Savings Bank continues to operate in Ohio under the name Mutual Federal, a division of First Bank Richmond.
First Bank Richmond provides full banking services through its seven full- and one limited-service offices located in Cambridge City (1), Centerville (1), Richmond (5) and Shelbyville (1), Indiana, its five full-service offices located in Piqua (2), Sidney (2) and Troy (1), Ohio, and its loan production office in Columbus, Ohio. Administrative, trust and wealth management services are conducted through First Bank Richmond’s Corporate Office/Financial Center located in Richmond, Indiana. As an Indiana-chartered commercial bank, First Bank Richmond is subject to regulation by the IDFI and the Federal Deposit Insurance Corporation (“FDIC”).
Our principal business consists of attracting deposits from the general public, as well as brokered deposits, and investing those funds primarily in loans secured by commercial and multi-family real estate, first mortgages on owner-occupied, one- to four-family residences, a variety of consumer loans, direct financing leases and commercial and industrial loans. We also obtain funds by utilizing Federal Home Loan Bank (“FHLB”) advances. Funds not invested in loans generally are invested in investment securities, including mortgage-backed and mortgage-related securities and government sponsored agency and municipal bonds.
First Bank Richmond 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 (no deposits) Counties, in Ohio. We sometimes refer to these counties as our primary market area. First Bank Richmond’s loans are generally secured by specific items of collateral including real property, consumer assets and business assets. Our leasing operation consists of direct investments in equipment that we lease (referred to as direct finance leases) to small businesses located throughout the United States. Our lease portfolio consists of various kinds of equipment, generally technology-related, such as computer systems, medical equipment and general manufacturing, industrial, construction and transportation equipment. We seek leasing transactions where we believe the equipment leased is integral to the lessee's business. We also provide trust and wealth management services, including serving as executor and trustee under wills and deeds and as guardian and custodian of employee benefits, and manage private investment accounts for individuals and institutions. Total wealth management assets under management and administration were $134.4 million at June 30, 2022.
Our results of operations are primarily dependent on net interest income. Net interest income is the difference between interest income, which is the income that is earned on loans and investments, and interest expense, which is the interest that is paid on deposits and borrowings. Other significant sources of pre-tax income are service charges (mostly from service charges on deposit accounts and loan servicing fees), and fees from sale of residential mortgage loans originated for sale in the secondary market. We also recognize income from the sale of investment securities.

30


Changes in market interest rates, the slope of the yield curve, and interest we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and shareholders’ equity, usually have the largest impact on changes in our net interest spread, net interest margin and net interest income during a reporting period.
First Insurance Management, Inc., a wholly-owned subsidiary of the Company which was formed and began operations in June 2022, is a Nevada-based captive insurance company that insures against certain risks unique to the operations of the Company and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. First Insurance Management, Inc. is subject to the regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance.
FB Richmond Holdings, Inc., a wholly-owned subsidiary of First Bank Richmond which was formed and began operations in April 2020, is a Nevada corporation that holds and manages substantially all of First Bank Richmond's investment portfolio. FB Richmond Holdings, Inc. has one active subsidiary, FB Richmond Properties, Inc., a Delaware corporation which holds loans on behalf of the Bank.
At June 30, 2022, on a consolidated basis, we had $1.3 billion in assets, $891.9 million in loans and leases, net of allowance, $945.3 million in deposits and $138.9 million in stockholders’ equity.  At June 30, 2022, First Bank Richmond’s total risk-based capital ratio was 16.72%, exceeding the 10.0% requirement for a well-capitalized institution. For the six months ended June 30, 2022, net income was $6.5 million, compared with net income of $5.3 million for the six months ended June 30, 2021.
Critical Accounting Policies
Certain accounting policies are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Management believes that its critical accounting policies include determining the allowance for loan and lease losses, the valuation of foreclosed assets, mortgage servicing rights, valuation of intangible assets and securities, deferred tax asset and income tax accounting.
Allowance for Loan and Lease Losses. We maintain an allowance for loan and lease losses to cover probable incurred credit losses at the balance sheet date. Loan and lease 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. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged-off. A provision for loan and lease losses is charged to operations based on our periodic evaluation of the necessary allowance balance.
We have an established process to determine the adequacy of the allowance for loan and lease losses. The determination of the allowance is inherently subjective, as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on other classified loans and pools of homogeneous loans, and consideration of past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors, all of which may be susceptible to significant change.
Mortgage Servicing Rights (“MSRs”). MSRs associated with loans originated and sold, where servicing is retained, are capitalized and included in the consolidated balance sheet. The value of the capitalized servicing rights represents the fair value of the right to service loans in the portfolio. Critical accounting policies for MSRs relate to the initial valuation and subsequent impairment tests. The methodology used to determine the valuation of MSRs requires the development and use of a number of estimates, including anticipated principal amortization and prepayments of that principal balance. Events that may significantly affect the estimates used are changes in interest rates, mortgage loan prepayment speeds and the payment performance of the underlying loans. The carrying value of the MSRs is periodically reviewed for impairment based on a determination of fair value. For purposes of measuring impairment, the servicing rights are compared to a valuation prepared based on a discounted cash flow methodology, utilizing current prepayment speeds and discount rates. Impairment, if any, is recognized through a valuation allowance and is recorded as a reduction in loan servicing fee income.
Securities. Under Financial Accounting Standards Board (“FASB”) Codification Topic 320 (ASC 320), Investments-Debt, investment securities must be classified as held to maturity, available for sale or trading. Management determines the appropriate classification at the time of purchase. The classification of securities is significant since it directly impacts the accounting for unrealized gains and losses on securities. Debt securities are classified as held to maturity and carried at

31


amortized cost when management has the positive intent and we have the ability to hold the securities to maturity. Securities not classified as held to maturity are classified as available for sale and are carried at fair value, with the unrealized holding gains and losses, net of tax, reported in other comprehensive income and which do not affect earnings until realized.
The fair values of our securities are generally determined by reference to quoted prices from reliable independent sources utilizing observable inputs. Certain of our fair values of securities are determined using models whose significant value drivers or assumptions are unobservable and are significant to the fair value of the securities. These models are utilized when quoted prices are not available for certain securities or in markets where trading activity has slowed or ceased. When quoted prices are not available and are not provided by third party pricing services, management judgment is necessary to determine fair value. As such, fair value is determined using discounted cash flow analysis models, incorporating default rates, estimation of prepayment characteristics and implied volatilities.
We evaluate all securities on a quarterly basis, and more frequently when economic conditions warrant additional evaluations, for determining if any other-than-temporary-impairments (“OTTI”) exist pursuant to guidelines established in ASC 320. In evaluating the possible impairment of securities, consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and our ability and intent to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, we may consider whether the securities are issued by the federal government or its agencies or government sponsored agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.
If management determines that an investment experienced an OTTI, we must then determine the amount of the OTTI to be recognized in earnings. If we do not intend to sell the security and it is more likely than not that we will not be required to sell the security before recovery of its amortized cost basis less any current period loss, the OTTI will be separated into the amount representing the credit loss and the amount related to all other factors. The amount of OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the OTTI related to other factors will be recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings will become the new amortized cost basis of the investment. If management intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the OTTI will be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. Any recoveries related to the value of these securities are recorded as an unrealized gain (as accumulated other comprehensive income (loss) in stockholders’ equity) and not recognized in income until the security is ultimately sold.
From time to time we may dispose of an impaired security in response to asset/liability management decisions, future market movements, business plan changes, or if the net proceeds can be reinvested at a rate of return that is expected to recover the loss within a reasonable period of time.
Deferred Tax Asset. We have evaluated our deferred tax asset to determine if it is more likely than not that the asset will be utilized in the future. Our most recent evaluation has determined that we will more likely than not be able to utilize our remaining deferred tax asset.
Income Tax Accounting. We file a consolidated federal income tax return. The provision for income taxes is based upon income in our consolidated financial statements, rather than amounts reported on our income tax return. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on our deferred tax assets and liabilities is recognized as income or expense in the period that includes the enactment date.
Comparison of Financial Condition at June 30, 2022 and December 31, 2021
General.  Total assets increased $4.0 million, or 0.3%, to $1.3 billion at June 30, 2022 from December 31, 2021. The increase was primarily the result of increases of $59.0 million, or 7.1% in loans and leases, net of allowance, to $891.9 million and $9.4 million, or 86.9%, in other assets to $20.2 million at June 30, 2022. These increases were partially offset by a $55.8 million, or 15.2%, decrease in investment securities to $310.8 million and an $8.6 million, or 37.4% decrease in cash and cash equivalents to $14.4 million at June 30, 2022.

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Investment Securities. Investment securities available-for-sale decreased $54.9 million, or 15.4%, to $302.6 million, while investment securities held-to-maturity decreased $897,000, or 9.9%, to $8.1 million at June 30, 2022 compared to December 31, 2021. The decrease in investment securities available-for-sale was primarily the result of a portion of the maturing securities and payments on securities being used to fund growth in the loan and lease portfolio, as well as greater mark-to-market adjustments to the portfolio due to increases in unrealized losses. The decrease in investment securities held-to-maturity was the result of scheduled principal repayments and maturities.
Loans and Leases. Our loan and lease portfolio, net of allowance for loan and lease losses, increased $59.0 million, or 7.1%, to $891.9 million at June 30, 2022 from $832.8 million at December 31, 2021.  The increase in loans and leases was attributable primarily to increases in commercial real estate loans of $17.3 million, multi-family loans of $14.0 million, and construction and development loans of $11.2 million. Commercial and industrial loans increased $6.7 million despite a decrease of $2.3 million in Paycheck Protection Program ("PPP") loans resulting from loan forgiveness by the U.S. Small Business Administration ("SBA"). PPP loans totaled $3.7 million at June 30, 2022. Loans held for sale totaled $1.1 million and $558,000 at June 30, 2022 and December 31, 2021, respectively.
Nonperforming loans and leases, consisting of nonaccrual loans and leases and accruing loans and leases more than 90 days past due, totaled $8.1 million or 0.89% of total loans and leases at June 30, 2022, compared to $8.0 million or 0.95% of total loans and leases at December 31, 2021. Accruing loans and leases past due more than 90 days totaled $2.1 million at June 30, 2022, compared to $1.8 million at December 31, 2021.
At June 30, 2022, troubled debt restructurings ("TDRs") totaled $432,000, compared to $456,000 at December 31, 2021, all of which were on nonaccrual status as of such dates.
Allowance for Loan and Lease Losses. The allowance for loan and lease losses increased $273,000, or 2.3%, to $12.4 million at June 30, 2022 from $12.1 million at December 31, 2021. At June 30, 2022, the allowance for loan and lease losses totaled 1.37% of total loans and leases outstanding, compared to 1.43% at December 31, 2021. Net charge-offs during the first half of 2022 were $127,000, compared to net charge-offs of $85,000 during the first half of 2021.  The allowance for loan and lease losses to non-performing loans and leases was 153.3% at June 30, 2022, compared to 150.8% at December 31, 2021.
Management regularly analyzes conditions within its geographic markets and evaluates its loan and lease portfolio. The Company evaluated its exposure to potential loan and lease losses as of June 30, 2022, which evaluation included consideration of potential credit losses due to economic conditions driven by any lingering impact of the COVID-19 pandemic, particularly concerning the ongoing difficulty businesses are having in hiring sufficient employees and the supply chain disruptions this has caused, as well as supply chain disruptions caused by the war in Ukraine. Any lingering impact of the pandemic and the war on the Company’s deposit and loan customers is still not fully known at this time. Credit metrics are being reviewed and stress testing is being performed on the loan portfolio on an ongoing basis. Potentially higher risk segments of the portfolio, such as hotels and restaurants, are being closely monitored.
Other Assets. Other assets increased $9.4 million, or 86.9%, to $20.2 million at June 30, 2022 from $10.8 million at December 31, 2021, primarily as a result of a $10.1 million increase in deferred tax assets due to the mark-to-market adjustment on the available-for-sale investment portfolio.
Deposits. Total deposits increased $45.2 million, or 5.0%, to $945.3 million at June 30, 2022, from $900.2 million at December 31, 2021.  The increase in deposits primarily was due to an increase in brokered time deposits of $31.2 million and
savings and money market accounts of $30.8 million, partially offset by a decrease in other time deposits of $21.7 million. Management attributes the shift in funds to customers anticipating potentially higher rates being paid on time deposits in 2022 in connection with the recent and expected future interest rate hikes by the Federal Reserve this year. Brokered deposits totaled $153.0 million, or 16.2% of total deposits, at June 30, 2022, compared to $121.8 million, or 13.5% of total deposits, at December 31, 2021. At June 30, 2022, noninterest-bearing deposits totaled $116.8 million, or 12.4% of total deposits, compared to $114.3 million or 12.7% of total deposits at December 31, 2021.
Borrowings. Total borrowings, consisting solely of FHLB advances, were steady at $180.0 million at June 30, 2022 and December 31, 2021.
Stockholders’ Equity. Stockholders’ equity totaled $138.9 million at June 30, 2022, a decrease of $41.5 million, or 23.0%, from December 31, 2021.  The decrease in stockholders' equity from year-end 2021 resulted from an increase in accumulated other comprehensive loss of $38.0 million due to a greater mark-to-market adjustment to the investment portfolio

33


as a result of higher interest rates, the payment of $2.2 million in dividends to Company stockholders, and the repurchase of $9.0 million of Company common stock, partially offset by net income of $6.5 million. The Company repurchased 552,082 shares of Company common stock at an average price of $16.25 per share for a total of $9.0 million during the first six months of 2022. The Company’s equity to asset ratio was 10.9% at June 30, 2022.  At June 30, 2022, the Bank’s Tier 1 capital to total assets ratio was 12.7% and the Bank’s capital was well in excess of all regulatory requirements.
Comparison of Results of Operations for the Three Months Ended June 30, 2022 and 2021.
General. Net income for the three months ended June 30, 2022 was $3.5 million, a $704,000 or 25.3% increase from net income of $2.8 million for the three months ended June 30, 2021. The $3.5 million in earnings equaled $0.31 diluted earnings per share for the second quarter of 2022, compared to $0.24 diluted earnings per share for the second quarter of 2021. The increase in net income was primarily the result of a $1.4 million increase in net interest income and a $330,000 decrease in the provision for loan losses, partially offset by a $464,000 decrease in noninterest income and a $278,000 increase in noninterest expense.
Interest Income.  Interest income increased $1.3 million, or 12.0%, to $12.4 million during the quarter ended June 30, 2022, compared to $11.1 million during the quarter ended June 30, 2021.  Interest income on loans and leases increased $826,000, or 8.4%, to $10.7 million for the quarter ended June 30, 2022, from $9.9 million for the comparable quarter in 2021, due to higher average balances in the loan and lease portfolio, partially offset by a decrease in the average loan and lease yield of 19 basis points.  The average outstanding loan and lease balances were $875.8 million for the quarter ended June 30, 2022, compared to $778.4 million for the quarter ended June 30, 2021.  The average yield on loans and leases was 4.88% for the quarter ended June 30, 2022, compared to 5.07% for the comparable quarter in 2021. Interest income included $91,000 in fees earned related to PPP loans in the quarter ended June 30, 2022 compared to $696,000 during the same quarter in 2021. As of June 30, 2022, total unrecognized fees on PPP loans were approximately $119,000.
Interest income on investment securities, including FHLB stock, increased $485,000, or 38.8%, to $1.7 million during the quarter ended June 30, 2022, compared to the same quarter in 2021.  The increase in interest income on investment securities from the comparable period in 2021 was due to an increase in the average balances of $10.5 million and a 53 basis point increase in the average yield earned on investment securities.  The average balance of investment securities, including FHLB stock, was $332.9 million for the quarter ended June 30, 2022, compared to $322.4 million for the quarter ended June 30, 2021.  The average yield on investment securities, including FHLB stock, was 2.08% for the second quarter of 2022, compared to 1.55% for the second quarter of 2021.
Interest Expense. Interest expense remained relatively flat at $1.9 million for the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021.  Interest expense on deposits increased $53,000, or 4.4%, to $1.3 million for the quarter ended June 30, 2022, from the comparable quarter in 2021. The increase in interest expense on deposits primarily was attributable to a $150.2 million increase in average interest-bearing deposit balances, partially offset by a 35 basis point decrease in the average rate paid on certificate of deposit accounts to 0.86% during the three months ended June 30, 2022, from 1.21% for the comparable quarter in 2021. The average rate paid on interest-bearing deposits was 0.62% for the quarter ended June 30, 2022, compared to 0.72% for the quarter ended June 30, 2021.  The average balance of interest-bearing deposits increased to $826.3 million, or 22.2%, in the quarter ended June 30, 2022, compared to $676.2 million in the comparable quarter in 2021. Interest expense on FHLB borrowings decreased $76,000, or 10.9%, to $624,000 in the second quarter of 2022 compared to $701,000 for the same quarter in 2021, due to a 15 basis point decline in the average rate paid on borrowings to 1.47% during the three months ended June 30, 2022, from 1.62% for the comparable quarter in 2021, and a $2.8 million decrease in the average outstanding balance of borrowings during the current quarter compared to the same period in 2021.
Net Interest Income.  Net interest income before the provision for loan and lease losses increased $1.4 million, or 14.8%, to $10.5 million in the second quarter of 2022, compared to $9.2 million for the second quarter of 2021.  This increase was due to an increase in average interest-earning assets and a 26 basis point increase in the average interest rate spread during the second quarter of 2022 compared to the comparable quarter in 2021. Net interest margin (annualized) was 3.45% for the three months ended June 30, 2022, compared to 3.27% for the three months ended June 30, 2021.  The increase in net interest margin was primarily due to the yield on interest-earning assets increasing 11 basis points while the rate paid on interest-bearing liabilities dropped 15 basis points. The average yield on PPP loans, including the recognition of deferred fees, resulted in a positive impact to the yield on loans and leases of three basis points during the quarter ended June 30, 2022, identical to the comparable quarter in 2021.
Average Balances, Interest and Average Yields/Cost.  The following tables set forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from

34


average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Average balances have been calculated using daily balances. Non-accruing loans have been included in the table as loans carrying a zero yield. Loan fees are included in interest income on loans and are not material.
Three Months Ended June 30,
20222021
Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
(Dollars in thousands)
Interest-earning assets:
Loans and leases receivable$875,801 $10,682 4.88 %$778,430 $9,857 5.07 %
Securities323,078 1,656 2.05 %313,327 1,185 1.51 %
FHLB stock9,781 78 3.19 %9,050 64 2.83 %
Cash and cash equivalents and other15,254 32 0.84 %22,839 0.11 %
Total interest-earning assets1,223,914 12,448 4.07 %1,123,646 11,112 3.96 %
Non-earning assets41,860 47,649 
Total assets1,265,774 1,171,295 
Interest-bearing liabilities:
Savings and money market accounts296,224 388 0.52 %253,086 317 0.50 %
Interest-bearing checking accounts169,618 111 0.26 %152,596 88 0.23 %
Certificate accounts360,498 776 0.86 %270,497 816 1.21 %
Borrowings170,264 624 1.47 %173,077 701 1.62 %
Total interest-bearing liabilities996,604 1,899 0.76 %849,256 1,922 0.91 %
Noninterest-bearing demand deposits113,887 112,279 
Other liabilities8,323 25,363 
Stockholders' equity146,960 184,397 
Total liabilities and stockholders' equity1,265,774 1,171,295 
Net interest income$10,549 $9,190 
Net earning assets$227,310 $274,390 
Net interest rate spread(1)
3.31 %3.05 %
Net interest margin(2)
3.45 %3.27 %
Average interest-earning assets to average interest-bearing liabilities
122.81 %132.31 %
_____________
(1)Annualized.  Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(2)Annualized. Net interest margin represents net interest income divided by average total interest-earning assets.
Provision for Loan and Lease Losses. The provision for loan and lease losses for the three months ended June 30, 2022 totaled $200,000 compared to $530,000 for the three months ended June 30, 2021, a $330,000 or 62.3% decrease. The decrease primarily was due to improvement in the overall economy from the effects of the COVID-19 pandemic and the continued positive effects of the government's response to the pandemic on the Bank's loan portfolio, partially offset by the increase in the loan portfolio. Net charge-offs during the second quarter of 2022 were $136,000, compared to net charge-offs of $58,000 in the second quarter of 2021. While we believe the steps we have taken and continue to take are necessary to effectively manage our portfolio and assist our clients through the ongoing uncertainty surrounding the duration and impact of the COVID-19 pandemic, uncertainties relating to our allowance for loan losses are heightened as a result of any possible continuing effects of the COVID-19 pandemic, the recent dramatic rise in inflation and interest rates and potential supply chain disruptions due to the war in Ukraine.

35


Noninterest Income.  Noninterest income decreased $464,000 or 28.3%, to $1.2 million for the quarter ended June 30, 2022, compared to $1.6 million for the comparable quarter in 2021.  The decrease in noninterest income resulted primarily from a $348,000 or 61.1% decrease in net gains on loan and lease sales to $222,000 during the second quarter of 2022, compared to $569,000 during the second quarter of 2021. The decrease in net gains on loan and lease sales was due to declining mortgage banking activity primarily resulting from lower refinancing activity and a lower supply of houses for sale in the Bank's market area. During the three months ended June 30, 2022, the Company sold $9.9 million of loans compared to the sale of $19.2 million of loans during the three months ended June 30, 2021. Card fee income increased $27,000, or 9.9%, to $302,000 in the second quarter of 2022 from $275,000 in the second quarter of 2021 due to increased debit card usage.  Loan and lease servicing income decreased $71,000, or 28.4%, to $178,000 for the second quarter of 2022 compared to $249,000 for the comparable quarter in 2021 as the Company recorded a recovery of $76,000 to the value of its mortgage servicing rights in the second quarter of 2022, compared to a recovery of $178,000 in the second quarter of 2021. Service fees on deposit accounts increased $50,000, or 25.0%, to $248,000 for the quarter ended June 30, 2022, compared to $199,000 for the quarter ended June 30, 2021. The increase in service fees on deposit accounts during the second quarter of 2022 compared to the second quarter of 2021 was primarily the result of increased overdraft fees, many of which were waived in the second quarter of 2021.
Noninterest Expense.  Noninterest expense increased $278,000, or 4.0%, to $7.2 million for the three months ended June 30, 2022, from $6.9 million for the same period in 2021.  Salaries and employee benefits increased $201,000, or 4.7%, to $4.5 million for the quarter ended June 30, 2022, compared to the same quarter in 2021. Other expenses decreased $85,000, or 9.7%, to $791,000 in the second quarter of 2022 compared to the same quarter of 2021 primarily due to decreased loan expenses, franchise tax expense and expenses related to employee professional development, partially offset by a decrease in fraud losses compared to the same quarter of 2021.
Income Tax Expense.  Income tax expense increased $243,000 during the three months ended June 30, 2022, compared to the same period in 2021 due to a higher level of pre-tax income and a higher effective tax rate.  The effective tax rate for the second quarter of 2022 was 20.2% compared to 18.7% for the same quarter a year ago.
Comparison of Results of Operations for the Six Months Ended June 30, 2022 and 2021.
General. Net income for the six months ended June 30, 2022 was $6.5 million, a $1.2 million or 21.7%, increase from net income of $5.3 million for the six months ended June 30, 2021. The $6.5 million in earnings equaled $0.58 diluted earnings per share for the first six months of 2022, compared to $0.45 diluted earnings per share for the first six months of 2021. The increase in net income was primarily the result of a $2.4 million increase in net interest income and a $530,000 decrease in the provision for loan losses, partially offset by a $876,000 decrease in noninterest income and a $634,000 increase in noninterest expense.
Interest Income.  Interest income increased $2.4 million, or 10.9%, to $24.4 million during the six months ended June 30, 2022, compared to $22.0 million during the six months ended June 30, 2021.  Interest income on loans and leases increased $1.2 million, or 6.2%, to $20.9 million for the six months ended June 30, 2022, from $19.7 million for the comparable period in 2021, due to higher average balances in the loan and lease portfolio, partially offset by a decrease in the average loan and lease yield of 26 basis points.  The average outstanding loan and lease balances were $862.9 million for the first six months of 2022, compared to $771.1 million for the first six months of 2021.  The average yield on loans and leases was 4.86% for the six months ended June 30, 2022, compared to 5.12% for the comparable period in 2021. Interest income also included $259,000 in fees earned related to PPP loans in the six months ended June 30, 2022 compared to $1.3 million during the same period in 2021. As of June 30, 2022, total unrecognized fees on PPP loans were $119,000.
Interest income on investment securities, including FHLB stock, increased $1.1 million, or 50.7%, to $3.4 million during the six months ended June 30, 2022, compared to the same period in 2021.  The increase in interest income on investment securities from the comparable period in 2021 was due to an increase in the average balances of $51.9 million and a 43 basis point increase in the average yield earned on investment securities.  The average balance of investment securities, including FHLB stock, was $348.1 million for the six months ended June 30, 2022, compared to $296.2 million for the six months ended June 30, 2021.  The average yield on investment securities, including FHLB stock, was 1.95% for the first half of 2022, compared to 1.52% for the first half of 2021.
Interest Expense. Interest expense remained relatively flat at $3.8 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.  Interest expense on deposits increased $115,000, or 4.8%, to $2.5 million for the six months ended June 30, 2022, from the comparable period in 2021. The increase in interest expense on deposits primarily was attributable to a $164.5 million increase in average interest-bearing deposit balances, partially offset by a 39 basis point decrease in the average rate paid on certificate of deposit accounts to 0.88% during the six months ended June 30, 2022, from

36


1.27% for the comparable period in 2021. The average rate paid on interest-bearing deposits was 0.62% for the six months ended June 30, 2022, compared to 0.75% for the six months ended June 30, 2021.  The average balance of interest-bearing deposits increased to $810.0 million, or 25.5%, in the six months ended June 30, 2022, compared to $645.4 million in the comparable period in 2021. Interest expense on FHLB borrowings decreased $131,000, or 9.3%, to $1.3 million in the first half of 2022 compared to $1.4 million for the same period in 2021, due to a 20 basis point decline in the average rate paid on borrowings to 1.43% during the six months ended June 30, 2022, from 1.63% for the comparable period in 2021, partially offset by a $5.3 million increase in the average outstanding balance of borrowings during the current period compared to the same period in 2021.
Net Interest Income.  Net interest income before the provision for loan and lease losses increased $2.4 million, or 13.3%, to $20.6 million in the first six months of 2022, compared to $18.2 million for the first six months of 2021.  This increase was due to an increase in average interest-earning assets and an 11 basis point increase in the average interest rate spread during the first six months of 2022 compared to the comparable period in 2021. Net interest margin (annualized) was 3.36% for the six months ended June 30, 2022, compared to 3.32% for the six months ended June 30, 2021. The increase in net interest margin was primarily due to the yield on interest-earning assets dropping slower than the rate paid on interest-bearing liabilities. The average yield on PPP loans, including the recognition of deferred fees, resulted in a positive impact to the yield on loans and leases of four basis points during the six months ended June 30, 2022, compared to a positive impact of eight basis points to the yield on loans and leases in the comparable period in 2021.
Average Balances, Interest and Average Yields/Cost.  The following tables set forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Average balances have been calculated using daily balances. Non-accruing loans have been included in the table as loans carrying a zero yield. Loan fees are included in interest income on loans and are not material.

37


Six Months Ended June 30,
20222021
Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
(Dollars in thousands)
Interest-earning assets:
Loans and leases receivable$862,940 $20,948 4.86 %$771,131 $19,724 5.12 %
Securities338,289 3,242 1.92 %287,190 2,125 1.48 %
FHLB stock9,844 161 3.27 %9,050 133 2.94 %
Cash and cash equivalents and other16,970 39 0.46 %27,193 13 0.10 %
Total interest-earning assets1,228,043 24,390 3.97 %1,094,564 21,995 4.02 %
Non-earning assets38,818 43,869 
Total assets1,266,861 1,138,433 
Interest-bearing liabilities:
Savings and money market accounts280,313 725 0.52 %238,200 595 0.50 %
Interest-bearing checking accounts167,630 208 0.25 %147,555 169 0.23 %
Certificate accounts362,011 1,591 0.88 %259,694 1,644 1.27 %
Borrowings176,845 1,264 1.43 %171,547 1,395 1.63 %
Total interest-bearing liabilities986,799 3,788 0.77 %816,996 3,803 0.93 %
Noninterest-bearing demand deposits112,393 108,420 
Other liabilities7,450 25,018 
Stockholders' equity160,219 187,999 
Total liabilities and stockholders' equity1,266,861 1,138,433 
Net interest income$20,602 $18,192 
Net earning assets$241,244 $277,568 
Net interest rate spread(1)
3.20 %3.09 %
Net interest margin(2)
3.36 %3.32 %
Average interest-earning assets to average interest-bearing liabilities
124.45 %133.97 %
_____________
(1)Annualized.  Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(2)Annualized. Net interest margin represents net interest income divided by average total interest-earning assets.
Provision for Loan and Lease Losses. The provision for loan and lease losses for the six months ended June 30, 2022 totaled $400,000 compared to $930,000 for the six months ended June 30, 2021, a $530,000 or 57.0% decrease. The decrease primarily was due to improvement in the overall economy from the effects of the COVID-19 pandemic and the positive effects of the government's response to the pandemic on the Bank's loan portfolio, partially offset by the increase in the loan portfolio. Net charge-offs during the first half of 2022 were $127,000, compared to net charge-offs of $85,000 in the first half of 2021.
Noninterest Income.  Noninterest income decreased $876,000, or 27.7%, to $2.3 million for the six months ended June 30, 2022, compared to $3.2 million for the comparable period in 2021.  The decrease in noninterest income resulted primarily from a $1.1 million or 69.7% decrease in net gains on loan and lease sales to $465,000 during the first half of 2022, compared to $1.5 million during the first half of 2021. The decrease in net gains on loan and lease sales was due to declining mortgage banking activity primarily resulting from lower refinancing activity and a lower supply of houses for sale in the Bank's market area. During the six months ended June 30, 2022, the Company sold $20.5 million of loans compared to the sale of $45.1 million of loans during the six months ended June 30, 2021. Card fee income increased $63,000, or 12.1%, to $580,000 in the first half of 2022 from $517,000 in the first half of 2021 due to increased debit card usage.  Loan and lease servicing income increased $63,000 to $206,000 for the first half of 2022 compared to $143,000 for the comparable period in 2021 adversely impacted by a recorded impairment of $35,000 to the value of its mortgage servicing rights in the first half of

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2022, compared to a recovery of $20,000 in the first half of 2021. Service fees on deposit accounts increased $90,000, or 22.8%, to $483,000 for the six months ended June 30, 2022, compared to $393,000 for the six months ended June 30, 2021. The increase in service fees on deposit accounts during the first half of 2022 compared to the first half of 2021 was primarily the result of increased overdraft fees, many of which were waived in the first half of 2021.
Noninterest Expense.  Noninterest expense increased $634,000, or 4.6%, to $14.5 million for the six months ended June 30, 2022, from $13.9 million for the same period in 2021.  Salaries and employee benefits increased $207,000, or 2.4%, to $9.0 million for the six months ended June 30, 2022, compared to the same period in 2021. Data processing fees increased $138,000, or 12.7%, to $1.2 million in the first six months of 2022 compared to the same period of 2021, primarily due to the upgrading of our digital banking products. Net occupancy expenses increased $87,000, or 13.9%, to $711,000 the first six months of 2022 compared to the same period of 2021, primarily due to higher property taxes, utilities expense, and maintenance expense. Other expenses increased $100,000, or 6.1%, to $1.7 million in the first half of 2022 compared to the same period of 2021 primarily due to increased loan expenses, franchise tax expense, expenses related to employee professional development, and expenses related to brokered certificates of deposit, partially offset by a reduction in fraud losses.
Income Tax Expense.  Income tax expense increased $271,000 during the six months ended June 30, 2022, compared to the same period in 2021 due to a higher level of pre-tax income.  The effective tax rate for the first half of 2022 was 18.7%, the same as the first half of 2021.
Capital and Liquidity
Capital. Shareholders' equity totaled $138.9 million at June 30, 2022 and $180.5 million at December 31, 2021. In addition to net income of $6.5 million, other sources of capital during the first six months of 2022 included $434,000 related to the allocation of ESOP shares during the year and $763,000 related to stock-based compensation. Uses of capital during the first six months of 2022 included $2.2 million of dividends paid on common stock, $38.0 million of other comprehensive loss, net of tax, and $9.0 million of stock repurchases. The decrease in the accumulated other comprehensive income/loss component of shareholders' equity was due to an increase in the unrealized loss on available-for-sale securities reflecting the increase in market interest rates during the current quarter.
We paid a regular quarterly dividend of $0.10 per common share during the first half of 2022, and regular quarterly dividends of $0.07 per common share and a special dividend of $0.50 per common share during 2021. We currently expect to continue the current practice of paying regular quarterly cash dividends on common stock subject to the Board of Directors' discretion to modify or terminate this practice at any time and for any reason without prior notice. Assuming continued payment during 2022 at the current dividend rate of $0.10 per share, our average total dividend paid each quarter would be approximately $1.2 million based on the number of our current outstanding shares (which assumes no increases or decreases in the number of shares, except in connection with the anticipated vesting of currently outstanding equity awards).
Stock Repurchase Plans. From time to time, our board of directors has authorized stock repurchase plans. In general, stock-repurchase plans allow us to proactively manage our capital position and return excess capital to shareholders. Shares purchased under such plans also provide us with shares of common stock necessary to satisfy obligations related to stock compensation awards. On May 19, 2021, the Board of Directors authorized a third stock repurchase program for up to 1,263,841 shares, or approximately 10% of our outstanding shares, which was completed on July 7, 2022. On July 21, 2022, the Company announced a fourth stock repurchase program for up to 1,184,649 shares, or approximately 10% of the Company's then outstanding shares, which program will expire in July 2023 unless completed sooner. The repurchase program does not obligate the Company to purchase any particular number of shares. See Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds.
Liquidity. Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits and to take advantage of interest rate market opportunities. The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds. The objective of our liquidity management is to manage cash flow and liquidity reserves so that they are adequate to fund our operations and to meet obligations and other commitments on a timely basis and at a reasonable cost. We seek to achieve this objective and ensure that funding needs are met by maintaining an appropriate level of liquid funds through asset/liability management, which includes managing the mix and time to maturity of financial assets and financial liabilities on our balance sheet. Our liquidity position is enhanced by our ability to raise additional funds as needed in the wholesale markets.

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Asset liquidity is provided by liquid assets which are readily marketable or pledgeable or which will mature in the near future. Liquid assets generally include cash, interest-bearing deposits in banks, securities available for sale, maturities and cash flow from securities held to maturity, sales of fixed rate residential mortgage loans in the secondary market, and federal funds sold and resell agreements. Liability liquidity generally is provided by access to funding sources which include core deposits and advances from the FHLB and other borrowing relationships with third party financial institutions.
Our liquidity position is continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Liquidity risk management is an important element in our asset/liability management process. We regularly model liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. These scenarios are incorporated into our contingency funding plan, which provides the basis for the identification of our liquidity needs.
As of June 30, 2022, we had approximately $3.6 million held in an interest-bearing account at the Federal Reserve. We also have the ability to borrow funds as a member of the FHLB. As of June 30, 2022, based upon available, pledgeable collateral, our total remaining borrowing capacity with the FHLB was approximately $70.0 million. Furthermore, at June 30, 2022, we had approximately $206.2 million in securities that were unencumbered by a pledge and could be used to support additional borrowings through repurchase agreements or the Federal Reserve discount window, as needed. As of June 30, 2022, management is not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on us.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities for the six months ended June 30, 2022 was $10.0 million, compared to $2.5 million of net cash used in operating activities for the six months ended June 30, 2021. During the six months ended June 30, 2022, net cash used in investing activities was $52.5 million, which consisted primarily of net change in loans receivable, compared to $133.4 million of net cash used in investing activities for the six months ended June 30, 2021. Net cash provided by financing activities for the six months ended June 30, 2022 was $33.9 million, which was comprised primarily of net change in deposits, compared to $104.2 million of net cash provided by financing activities during the six months ended June 30, 2021. Management believes the capital sources are adequate to meet all reasonably foreseeable short-term and long-term cash requirements and there has not been a material change in our liquidity and capital resources since the information disclosed in our 2021 Form 10-K other than set forth above.
Richmond Mutual Bancorporation is a separate legal entity from First Bank Richmond and must provide for its own liquidity. In addition to its own operating expenses, Richmond Mutual Bancorporation is responsible for paying for any stock repurchases, dividends declared to its stockholders and other general corporate expenses. Since Richmond Mutual Bancorporation is a holding company and does not conduct operations, its primary sources of liquidity are interest on investment securities purchased with proceeds from our initial public offering, dividends upstreamed from First Bank Richmond and borrowings from outside sources. Banking regulations may limit the amount of dividends that may be paid by First Bank Richmond. At June 30, 2022, Richmond Mutual Bancorporation, on an unconsolidated basis, had $8.9 million in cash, noninterest-bearing deposits and liquid investments generally available for its cash needs.

Regulatory Capital Requirements. First Bank Richmond is subject to minimum capital requirements imposed by the FDIC. The FDIC may require us to have additional capital above the specific regulatory levels if it believes we are subject to increased risk due to asset problems, high interest rate risk and other risks.  At June 30, 2022, First Bank Richmond’s regulatory capital exceeded the FDIC regulatory requirements, and First Bank Richmond was well-capitalized under regulatory prompt corrective action standards. Consistent with our goals to operate a sound and profitable organization, our policy is for First Bank Richmond to maintain well-capitalized status.

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ActualRequired for Adequate CapitalTo Be Well
Capitalized
AmountRatioAmountRatioAmountRatio

(Dollars in thousands)
As of June 30, 2022
Total risk-based capital (to risk weighted assets)$177,431 16.7 %$84,899 8.0 %$106,124 10.0 %
Tier 1 risk-based capital (to risk weighted assets)165,050 15.6 63,674 6.0 84,899 8.0 
Common equity tier 1 capital (to risk weighted assets)165,050 15.6 47,756 4.5 68,981 6.5 
Tier 1 leverage (core) capital (to adjusted tangible assets)165,050 12.7 51,812 4.0 64,765 5.0 
As of December 31, 2021
Total risk-based capital (to risk weighted assets)$169,589 17.3 %$78,590 8.0 %$98,238 10.0 %
Tier 1 risk-based capital (to risk weighted assets)157,481 16.0 58,943 6.0 78,590 8.0 
Common equity tier 1 capital (to risk weighted assets)157,481 16.0 44,207 4.5 63,855 6.5 
Tier 1 leverage (core) capital (to adjusted tangible assets)157,481 12.5 50,284 4.0 62,855 5.0 
Pursuant to the capital regulations of the FDIC and the other federal banking agencies, First Bank Richmond must maintain a capital conservation buffer consisting of additional common equity tier 1 (“CET1”) capital greater than 2.5% of risk-weighted assets above the required minimum levels of risk-based CET1 capital, tier 1 capital and total capital in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses.  At June 30, 2022, the Bank’s CET1 capital exceeded the required capital conservation buffer.
For a bank holding company with less than $3.0 billion in assets, the capital guidelines apply on a bank only basis and the Federal Reserve Board expects the holding company’s subsidiary banks to be well capitalized under the prompt corrective action regulations.  If Richmond Mutual Bancorporation were subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at June 30, 2022, it would have exceeded all regulatory capital requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There has not been any material change in the market risk disclosures contained in our 2021 Form 10-K.
ITEM 4.  CONTROLS AND PROCEDURES
(a)     Evaluation of Disclosure Controls and Procedures.
An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Act”)) as of June 30, 2022, was carried out under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of senior management.  Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures in effect as of June 30, 2022, were effective.  In addition, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons, by collusion of two or more people, or by override of the control. The design of any control procedure also is

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based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.
(b)    Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Act) that occurred during the three months ended June 30, 2022, that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS
We are not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at June 30, 2022, we were not involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations.
ITEM 1A.  RISK FACTORS
There have been no material changes in the Risk Factors previously disclosed in Item 1A of the Company's 2021 Form 10-K.
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)Not applicable
(b)Not applicable
(c)On May 19, 2021, the Board of Directors authorized a third stock repurchase program for up to 1,263,841 shares, or approximately 10% of its then outstanding shares. This repurchase program was completed on July 7, 2022. The following table sets forth information with respect to our repurchases of our outstanding common shares during the three months ended June 30, 2022:
Total
number of
shares
purchased
Average
price
paid
per share
Total number of
shares purchased
as part of
publicly announced
plans or programs
Maximum number of shares that may yet be purchased under the plans or programs (1)
April 1, 2022 - April 30, 202218,906 $16.81 18,906 890,456 
May 1, 2022 - May 31, 2022345,816 16.36 345,816 544,640 
June 1, 2022 - June 30, 202297,169 15.44 97,169 447,471 
461,891 16.18 461,891 
(1)     On July 21, 2022, the Company announced that its Board of Directors authorized a fourth stock repurchase program for up to 1,184,649 shares, or approximately 10% of its then outstanding shares, which will expire in July 2023, unless completed sooner.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
Nothing to report.
ITEM 4.  MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.  OTHER INFORMATION
Nothing to report.

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ITEM 6.  EXHIBITS
Exhibit
101.0The following materials for the quarter ended June 30, 2022, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements
104Cover Page Interactive Data File (embedded within the Inline XBRL document).

+ Indicates management contract or compensatory plan or arrangement.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
RICHMOND MUTUAL BANCORPORATION, INC.
Date: August 12, 2022By:/s/ Garry D. Kleer
Garry D. Kleer
Chairman, President and CEO
(Duly Authorized Officer)
Date: August 12, 2022By:/s/ Donald A. Benziger
Donald A. Benziger
Executive Vice President and CFO
(Principal Financial and Accounting Officer)


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