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Section 1: 8-K (RICHMOND MUTUAL BANCORPORATION, INC. - FORM 8-K SEC FILING)

Richmond Mutual Bancorporation, Inc. - Form 8-K SEC filing
0001767837 false 0001767837 2020-04-27 2020-04-27

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM 8-K

_____________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 23, 2020

Richmond Mutual Bancorporation, Inc.

(Exact name of registrant as specified in its charter)

 

Maryland

 

001-38956 

 

36-4926041

(State or other jurisdiction of incorporation)

 

(Commission File No.)

 

(IRS Employer Identification No.)

 

31 North 9th Street, Richmond, Indiana

 

47374

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: (765) 962-2581

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

 

Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company

 

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

 




Items to be Included in this Report

 

ITEM 2.02

Results of Operations and Financial Condition

 

On July 23, 2020, the Registrant announced second quarter 2020 earnings.  A copy of the earning release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

 

 

 

 

ITEM 9.01

Financial Statements and Exhibits

(d)

Exhibit

 

99.1

Press release dated July 23, 2020, announcing second quarter 2020 earnings

 




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: July 23, 2020

By:

/s/Donald A. Benziger

 

 

 

Donald A. Benziger

 

 

 

Executive Vice President and CFO

 


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Section 2: EX-99 (EXHIBIT 99.1 -- PRESS RELEASE DATED JULY 23, 2020)

1ST SECURITY BANK OF WASHINGTON MEMBERS APPROVE

Exhibit 99.1

 

RICHMOND MUTUAL BANCORPORATION, INC. ANNOUNCES SECOND QUARTER 2020 FINANCIAL RESULTS

 

RICHMOND, INDIANA (July 23, 2020) – Richmond Mutual Bancorporation, Inc., a Maryland corporation (the “Company”) (NASDAQ: RMBI), parent company of First Bank Richmond (the “Bank”), today announced net income of $2.5 million, or $0.20 diluted earnings per share, for the second quarter of 2020, which was unchanged from first quarter of 2020 and up $2.2 million compared to net income of $335,000 for the second quarter of 2019.  Net income was $5.0 million, or $0.40 diluted earnings per share for the first half of 2020, compared to $1.7 million for the first half of 2019.  There is no comparison of earnings per share to the second quarter or first half of 2019, as the Company’s reorganization from the mutual to stock form of ownership and related stock offering was not completed until July 1, 2019.

President’s Comments

Garry Kleer, Chairman, President and Chief Executive Officer, commented, “We hit the ground running in the second quarter of 2020.  The Paycheck Protection Program kicked off on April 3rd and our employees worked nights and weekends to process all the applications.  As of June 30, 2020, we had received, processed and funded 465 loans totaling $64.3 million.  Deferment requests have declined significantly as of quarter end; however, we have continued to receive some requests for additional deferment from borrowers, especially in the hard-hit restaurant and hotel industries. We re-opened our main office and branch lobbies on June 8, 2020, with lobby traffic lighter than normal since re-opening. Our sanitation and disinfecting protocols remain in place to keep our customers and employees as safe as possible.”

“Our purchase and refinance mortgage volume has been tremendous. For the quarter, our gain on sale income exceeded the gain on sale income for all of 2019. We anticipate some further net interest margin compression in the third and fourth quarters of 2020 as loans reprice in the current interest rate environment.  The decline in loan income should be partially offset by the gradual decline in deposit rates.  While we increased our provision for loan and lease losses during the second quarter, there is still significant uncertainty in the ultimate impact of the COVID-19 pandemic on our borrowers and the performance of our loan and lease portfolio.  Given our very strong capital position, we approved and paid a 5 cent per share dividend on June 18, 2020.  We also approved a 5% stock buyback that will begin July 24, 2020.  Both these actions demonstrate our commitment to our shareholders” concluded Kleer.

Our Response to COVID-19 Pandemic

Loan Programs. During the second quarter of 2020, we continued our participation in the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) to provide ongoing support to our clients and communities.  As of June 30, 2020, we had funded $64.3 million of PPP loans.     

Loan Modifications.  We continue to receive inquiries and requests from borrowers for some type of payment relief. The primary method of relief is to allow the borrower up to a 90-day payment deferment.  We also have waived loan late fees and suspended foreclosure proceedings.  We believe the steps we are taking are necessary to effectively manage our portfolio and assist our clients through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic.

 


The following table summarizes information relating to loan deferments at quarter ended June 30, 2020 and March 31, 2020:

 

 

June 30, 2020

 

March 31, 2020

($ in thousands)

 

Number of Loans

 

Balance

 

Number of Loans

 

Balance

Commercial mortgage

 

70

 

$

98,010

 

21

 

$

27,050

Commercial and industrial

 

27

 

12,692

 

10

 

1,730

Construction and development

 

3

 

10,098

 

 

Multi-Family

 

13

 

21,197

 

5

 

4,465

Residential mortgage

 

88

 

11,198

 

8

 

1,379

Home equity

 

7

 

215

 

 

Direct financing leases

 

507

 

21,080

 

176

 

8,058

Consumer

 

37

 

597

 

 

Total Loans 

 

752

 

$

175,087

 

220

 

$

42,682

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes information relating to hospitality loan deferments (which are included in the table above) at quarter ended June 30, 2020 and March 31, 2020:

 

 

June 30, 2020

 

 

March 31, 2020

 

($ in thousands)

 

Number of Loans

 

Balance

Percent of total loans in category

 

 

Number of Loans

 

Balance

Percent of total loans in category

 

Restaurants

 

7

 

$

1,356

24.64

%

 

2

 

$

410

13.23

%

Hotels

 

19

 

44,455

72.58

%

 

8

 

19,531

37.51

%

Total Loans 

 

26

 

$

45,811

68.62

%

 

10

 

$

19,941

36.15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We continue to monitor our loan portfolio and strive to work with our customers and communities.  Certain customers have requested an additional 90-day deferment.  Shown in the following table is a listing of a second round of deferments granted as of June 30, 2020, followed by detailed information on commercial mortgage loans.

($ in thousands)

 

Number of 2nd Deferrals Granted

 

Amount

Commercial mortgage

 

4

 

$

6,208

Commercial and industrial

 

 

Construction and development

 

 

Multi-Family

 

 

Residential mortgage

 

4

 

474

Home equity

 

1

 

4

Direct financing leases

 

20

 

1,058

Consumer

 

2

 

9

Total Loans 

 

31

 

$

7,753

 

 

 

 

 

 


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Loan Type

 

Amount

 

LTV

 

CRE - Non-residential

 

$

120

 

46.7

%

CRE - Hotel

 

5,338

 

54.0

%

CRE - Hotel

 

694

 

79.0

%

CRE - Hotel

 

56

 

26.3

%

Branch Operations and Support Personnel.  Many of our employees continue to work remotely or have flexible work schedules, and we have established protective measures within our offices to help ensure the safety of those employees who must work on-site.  We have also taken steps to resume more normal branch activities with specific guidelines in place to ensure the safety of our clients and our personnel.  This includes the installation of counter shields and hand sanitizing stations, limiting the number of clients in a branch at any one time, requiring social distancing and the wearing of masks within the branch, diligent disinfecting of common area high touchpoints and encouraging the use of our digital and electronic banking channels.  We continuously monitor and conform our practices based on updates from the Center for Disease Control, World Health Organization, Financial Regulatory Agencies, and local and state health departments.  

Capital Strength.  At June 30, 2020, the Company’s stockholders’ equity totaled $196.1 million, an $8.3 million, or 4.5% increase from year-end 2019. The Company’s equity to asset ratio was 17.20% at June 30, 2020. At June 30, 2020, the Bank’s Tier I capital to total assets was 13.43% and the Bank’s capital was well in excess of all regulatory requirements.

Second Quarter Performance Highlights:

·Assets totaled $1.1 billion at June 30, 2020, compared to $986,000 at December 31, 2019. 

·Loans and leases, net of allowance, totaled $752.9 million at June 30, 2020, compared to $687.1 million at March 31, 2020 and $687.3 million at December 31, 2019.  

·Nonperforming loans and leases totaled $4.3 million or 0.57% of total loans at June 30, 2020, compared to $4.3 million or 0.61% of total loans at March 31, 2020, and $3.8 million or 0.55% of total loans at December 31, 2019. 

·The allowance for loan and lease losses totaled $8.5 million, or 1.12% of total loans and leases outstanding, at June 30, 2020, compared to $7.3 million, or 1.05% of total loans and leases outstanding, at March 31, 2020, and $7.1 million, or 1.02% of total loans and leases outstanding, at December 31, 2019. The provision for losses totaled $1.3 million for the current quarter compared to $210,000 in the preceding quarter and $885 in the quarter ended December 31, 2019. 

·Deposits totaled $739.1 million at June 30, 2020, compared to $605.2 million at March 31, 2020 and $617.2 million at December 31, 2019. At June 30, 2020, noninterest bearing deposits totaled $89.9 million or 12.2% of total deposits, compared to $62.5 million or 10.3% of total deposits at March 31, 2020 and $60.3 million or 9.8% at December 31, 2019. 

·The Bank remains a “well-capitalized” institution for regulatory capital purposes at June 30, 2020.  

·Annualized net interest margin was 3.03% for the current quarter, compared to 3.32% in the preceding quarter and 3.27% in the second quarter a year ago. 

 

Balance Sheet Summary

 

Total assets increased $154.1 million, or 15.6%, to $1.1 billion at June 30, 2020, from $986.0 million at December 31, 2019. The increase was primarily a result of a $65.7 million, or 9.6%, increase in loans and leases, net of allowance, to $752.9 million at June 30, 2020 from $687.3 million at December 31, 2019, and a $70.0 million, or 172.5%, increase in cash and cash equivalents to $110.6 million at June 30, 2020, compared to $40.6 million at December 31, 2019.  The increase in loans and leases was attributable to PPP loans, which accounted for $64.3 million of the $65.7 million increase.  The increase in cash and cash equivalents primarily was the result of an increase in brokered deposits and


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FHLB borrowings as part of the Company’s strategy to increase liquidity. Investment securities increased $16.8 million, or 7.7%, from $217.7 million at December 31, 2019 to $234.5 million at June 30, 2020.

 

Nonperforming loans and leases, consisting of nonaccrual loans and leases and accruing loans and leases more than 90 days past due, totaled $4.3 million or 0.57% of total loans and leases at June 30, 2020, compared to $4.3 million or 0.61% of total loans at March 31, 2020, and $3.8 million or 0.55% of total loans and leases at December 31, 2019. Accruing loans past due more than 90 days at June 30, 2020, totaled $3.3 million, compared to $3.1 million at March 31, 2020, and $2.6 million at December 31, 2019.

 

The allowance for loan and lease losses increased $1.4 million, or 20.2%, to $8.5 million at June 30, 2020 from $7.1 million at December 31, 2019.  At June 30, 2020, the allowance for loan and lease losses totaled 1.12% of total loans and leases outstanding compared to 1.02% at December 31, 2019.  The allowance for loan and lease losses to total loans increases 10 basis points if PPP loans, which totaled $64.3 million at June 30, 2020 and are 100% guaranteed by the SBA, are excluded from the calculation. Net charge-offs during the first six months of 2020 were $98,000 or 0.03% of average loans and leases outstanding, compared to net charge-offs of $329,000, or 0.10% of average loans and leases outstanding during the first six months of 2019.

 

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, 2020, which evaluation included consideration of potential credit losses due to the deteriorating economic conditions driven by the impact of the COVID-19 pandemic.  The full impact of the pandemic on the Company’s deposit and loan customers is still unknown. The Company has increased its qualitative factors when determining the adequacy of its allowance for loan and lease losses.  Credit metrics are being reviewed and stress testing is being performed on the loan portfolio.  Potentially higher risk segments of the portfolio, such as hotels and restaurants, are being closely monitored as are loan payment deferrals.

 

Total deposits increased $121.9 million, or 19.8%, to $739.1 million at June 30, 2020 from $617.2 million at December 31, 2019. This increase in deposits was primarily due to an increase in brokered deposits (as the Company sought to increase its liquidity position) and an increase in demand deposit and savings accounts primarily related to disbursements of PPP loan funds to borrowers’ deposit accounts [as well as reduced withdrawals reflecting changes in customer spending habits due to the COVID-19 pandemic].  Brokered deposits increased $64.1 million to $120.7 million, or 16.3% of total deposits, at June 30, 2020, compared to $56.7 million, or 9.2% of total deposits, at December 31, 2019.  Demand deposit and savings accounts increased $60.1 million to $395.9 million at June 30, 2020, compared to $335.8 million at December 31, 2019.  At June 30, 2020, noninterest bearing deposits totaled $89.9 million or 12.2% of total deposits, compared to $60.3 million or 9.8% of total deposits at December 31, 2019.

 

Stockholders’ equity totaled $196.1 million at June 30, 2020, an increase of $8.3 million from December 31, 2019. The increase in stockholders’ equity primarily was the result of net income of $5.0 million in the first half of 2020 and a $3.7 million improvement in accumulated other comprehensive income, partially offset by $623,000 in dividends paid to shareholders.

 

Income Statement Summary

 

Net interest income before the provision for loan and lease losses increased $137,000, or 1.7%, to $8.0 million in the second quarter of 2020, compared to $7.9 million in the first quarter of 2020 and increased $542,000, or 7.2%, from $7.5 million in the second quarter of 2019.  The increase primarily was due to an increase in average interest-earning assets during the second quarter of 2020 compared to the first quarter of 2020 and the comparable period in 2019. The total benefit of this increase in average interest-earning assets was diminished by the significant reduction in the targeted Federal Funds Rate since July 2019, including the 150-basis point decrease in March 2020 in response to the COVID-19 pandemic.

 

Interest income increased $47,000, or 0.5%, to $10.5 million during the quarter ended June 30, 2020, compared to the quarter ended March 31, 2020 and increased $100,000, or 1.0%, compared to $10.4 million during the quarter ended June 30, 2019.  Interest income on loans increased $244,000, or 2.7%, to $9.3 million for the quarter ended June 30, 2020, compared to $9.1 million for the first quarter in 2020, and increased $145,000, or 1.6%, from $9.2 million for the comparable quarter in 2019, due to higher average loan balances.  The average outstanding loan balances were $747.9 million for the quarter ended June 30, 2020, compared to $686.2 million for the quarter ended March 31, 2020 and $687.0 million for the quarter ended June 30, 2019.  The average yield on loans was 4.98% for the quarter ended


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June 30, 2020, compared to 5.28% and 5.33% for the quarters ended March 31, 2020 and June 30, 2019, respectively.  The yield on the loan portfolio was impacted by the PPP loan activity during the second quarter of 2020 as PPP loans are originated at an interest rate of 1%, although the effective yield is slightly higher as a result of the origination fees paid to us by the SBA.  The average yield on PPP loans was 3.22%, including the recognition of the net deferred fees, resulting in a negative impact to the net interest margin of 12 basis points during the quarter ended June 30, 2020.

 

Interest income on investment securities, including FHLB stock, decreased $85,000, or 6.7%, to $1.2 million during the quarter ended June 30, 2020, compared to $1.3 million during the quarter ended March 31, 2020, and increased $222,000, or 23.2%, from $957,000 during the comparable quarter in 2019.  The decrease in interest income on investment securities, including FHLB stock, from the previous quarter was due to a decrease in the weighted average yield, while the increase from the comparable period in 2019 was due to higher average balances, partially offset by a lower weighted average yield.  The average balance of investment securities, including FHLB stock, was $256.6 million for the quarter ended June 30, 2020, compared to $232.2 million and $157.8 million for the quarters ended March 31, 2020 and June 30, 2019, respectively.  The average yield on investment securities, including FHLB stock, was 1.84% for the second quarter of 2020, compared to 2.18% and 2.45% for the previous quarter of 2020 and the second quarter of 2019, respectively.  Interest income earned on cash and cash equivalents decreased to $11,000 in the second quarter of 2020 compared to $125,000 in the first quarter of 2020 and $278,000 in the comparable quarter of 2019.  This was due to the significantly lower yield earned on funds at the Federal Reserve after the rate reductions experienced in the second half of 2019 and in March 2020.

 

Interest expense decreased $89,000, or 3.5%, to $2.5 million for the quarter ended June 30, 2020, compared to $2.6 million the first quarter of 2020, and decreased $441,000, or 15.1%, from $2.9 million for the quarter ended June 30, 2019.  Interest expense on deposits decreased $120,000, or 6.6%, to $1.7 million for the quarter ended June 30, 2020, from $1.8 million in the previous quarter and decreased $403,000, or 19.1%, from $2.1 million for the comparable quarter in 2019.  This decrease in interest expense on deposits from the previous quarter and the comparable quarter in 2019 was attributable to the lower weighted average rate paid on interest-bearing deposits, partially offset by higher average deposit balances. The weighted average rate paid on interest-bearing deposits was 1.13% for the quarter ended June 30, 2020, compared to 1.34% and 1.40% for the quarters ended March 31, 2020 and June 30, 2019, respectively.  Interest expense on FHLB borrowings increased $31,000, or 4.2%, to $770,000 for the second quarter of 2020 compared to $739,000 during the previous quarter and decreased $38,000, or 4.7%, from $809,000 for the comparable quarter in 2019.  The average balance of FHLB borrowings totaled $181.8 million during the quarter ended June 30, 2020, compared to $164.1 million and $147.4 million for the quarters ended March 31, 2020 and June 30, 2019, respectively.  The weighted average rate paid on FHLB borrowings was 1.69% for the quarter ended June 30, 2020, an 11 basis point decline from 1.80% for the first quarter of 2020 and a 51 basis point decline from 2.20% for the comparable quarter in 2019.

 

Annualized net interest margin was 3.03% for the second quarter of 2020, compared to 3.32% and 3.27% for the first quarter of 2020 and second quarter of 2019, respectively.  The decline in the net interest margin for the current quarter compared to the prior quarters primarily was due to yields earned on interest-earning assets declining at a faster rate than interest rates paid on interest-bearing liabilities.

 

The provision for loan and lease losses for the three months ended June 30, 2020 totaled $1.3 million, compared to $210,000 for the quarter ended March 31, 2020 and $485,000 for the quarter ended June 30, 2019.  The increased provision was primarily due to the continued uncertainty of the economic impact of the COVID-19 pandemic on the Bank’s loan portfolio.  Net charge-offs during the second quarter of 2020 were $106,000, compared to net recoveries of $7,000 during the first quarter of 2020 and net charge-off of $40,000 in the second quarter of 2019.  As the COVID-19 pandemic continues, we expect to see continued pressure on asset quality.  As management continues to monitor the loan portfolio, additional provisions may be required.

 

Total noninterest income increased $1.1 million, or 118.6%, to $2.1 million for the quarter ended June 30, 2020 compared to $953,000 for the quarter ended March 31, 2019, and increased $1.2 million, or 131.4%, from $900,000 for the comparable quarter in 2019. The increase in noninterest income resulted primarily from the increase in the gain on sale of loans and leases, which increased $803,000, or 351.9% to $1.0 million during the second quarter of 2020, compared to $228,200 during the first quarter of 2020 and increased $907,000, or 734.1%, from $124,000 in the comparable period of 2019 as a result of increased mortgage banking activity during the current quarter due to lower rates. Loan and lease servicing income increased $367,000 to $301,000 for the quarter ended June 30, 2020 compared to a loss of $66,000 for the quarter ended March 31, 2020, and increased $202,000, or 204.5%, from $99,000 for the comparable quarter in 2019. In the second quarter of 2020, the Company recorded a recovery to the value of its


5


mortgage servicing rights of $296,000, compared to a $114,000 impairment charge recorded in the first quarter of 2020, and no impairment recovery or charge recorded in the second quarter of 2019.  Other loan fees increased $162,000, or 195.2%, to $245,000 in the second quarter of 2020 compared to the quarter ended March 31, 2020, and increased $156,000, or 176.8%, over the comparable quarter in 2019.  The increase during the current quarter compared to the prior quarter was primarily due to increased letter of credit fees of $55,000 and interest rate modification fees of $76,000 earned in the second quarter of 2020.  The increase in the second quarter of 2020 compared to the second quarter of 2019 was attributable to increased letter of credit fees of $58,000 and loan processing fees of $75,000.  Service fees on deposit accounts decreased $149,000, or 58.4%, to $106,000 for the quarter ended June 20, 2020, compared to $255,000 the first quarter of 2020, and decreased $146,000, or 58.1% from $252,000 for the quarter ended June 30, 2019.  These decreases in the second quarter of 2020 were the result of the Company’s waiving of overdraft fees.

 

Total noninterest expense increased $124,000, or 2.2%, to $5.6 million for the three months ended June 30, 2020 compared to $5.5 million for the first quarter of 2020, and decreased $2.0 million, or 25.7%, from $7.6 million for the same period in 2019.  Salaries and employee benefits decreased $93,000, or 2.8%, to $3.3 million for the quarter ended June 30, 2020, compared to $3.4 million in the first quarter of 2020, and decreased $2.0 million, or 38.5%, from $5.3 million for the quarter ended June 30, 2019.  The decreases from the first quarter of 2020 were primarily due to decreases in health insurance and ESOP costs.  The $2.0 million decrease from the comparable quarter in 2019 was primarily attributable to the $1.7 million pre-tax expense related to the adoption of a nonqualified deferred compensation plan during the second quarter of 2019.  Excluding this expense, salaries and employee benefits decreased $369,000, or 10.3%, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019.  Data processing expenses decreased $5,000 in the second quarter of 2020 compared to the first quarter of 2020, and increased $48,000, or 11.3%, compared to the second quarter of 2019, due to normal price increases associated with information technology services and additional digital services and products offered by the Company.  Deposit insurance expense increased $4,000, to $60,000, in the second quarter of 2020 compared to the first quarter of 2020, and decreased $98,000, or 62.0% compared to the second quarter of 2019.  The decrease from the second quarter of 2019 was due to the Bank’s higher capital ratios resulting from the Company’s injection of capital into the Bank in connection with our reorganization to a stock holding company and related stock offering.  Legal and professional fees increased $86,000, or 35.7%, to $327,000 for the quarter ended June 30, 2020 compared to $241,000 for the quarter ended March 31, 2020, and increased $118,000, or 56.4% from $209,000 for the comparable quarter in 2019.  The increase in legal and professional fees was due to the establishment of an out-of-state subsidiary of First Bank for investment management purposes in the second quarter of 2020.

 

Income tax expense decreased $22,000 during the three months ended June 30, 2020, compared to the prior quarter despite slightly higher pre-tax income due to a lower effective federal tax rate compared to the prior quarter. Income tax expense increased $674,000 during the three months ended June 30, 2020, compared to the same period in 2019, primarily due to a $2.8 million increase in pre-tax income. The effective tax rate for the second quarter of 2020 was 20.2% compared to 21.1% for the first quarter of 2020 and a 14.3% benefit for the same quarter a year ago.

 

About Richmond Mutual Bancorporation, Inc.

 

Richmond Mutual Bancorporation, Inc., headquartered in Richmond, Indiana, is the holding company for First Bank Richmond, a community-oriented financial institution offering traditional financial and trust services within its local communities through its eight locations in Richmond, Centerville, Cambridge City and Shelbyville, Indiana, its five locations in Sidney, Piqua and Troy, Ohio and its loan production office in Columbus, Ohio.  


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FORWARD-LOOKING STATEMENTS:

 

This document and other filings by the Company with the Securities and Exchange Commission (the "SEC"), as well as press releases or other public or stockholder communications released by the Company, may contain forward-looking statements, including, but not limited to, (i) statements regarding the financial condition, results of operations and business of the Company, (ii) statements about the Company's plans, objectives, expectations and intentions and other statements that are not historical facts and (iii) other statements identified by the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "intends" or similar expressions that are intended to identify "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current beliefs and expectations of the Company's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

 

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: the effect of the COVID-19 pandemic, including on the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties such as the extent and duration of the impact of the pandemic on public health, the U.S. and global economies, and on consumer and corporate customers, including economic activity, employment levels and market liquidity: legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; changes in management's business strategies; changes in the regulatory and tax environments in which the Company operates; and other factors set forth in the Company's filings with the SEC.

 

The factors listed above could materially affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

 

The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. When considering forward-looking statements, keep in mind these risks and uncertainties. Undue reliance should not be placed on any forward-looking statement, which speaks only as of the date made. Refer to the Company's periodic and current reports filed with the SEC for specific risks that could cause actual results to be significantly different from those expressed or implied by any forward-looking statements.


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Financial Highlights (unaudited)

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

SELECTED OPERATIONS DATA:

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

 

 

June 30, 2020

 

June 30, 2019

 

 

 

In thousands, except for per share amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

10,498

 

$

10,451

 

$

10,398

 

 

 

$

20,950

 

$

20,155

 

Interest expense

 

2,474

 

2,564

 

2,916

 

 

 

5,039

 

5,553

 

Net interest income 

 

8,024

 

7,887

 

7,482

 

 

 

15,911

 

14,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

1,320

 

210

 

485

 

 

 

1,530

 

1,010

 

Net interest income after provision

 

6,704

 

7,677

 

6,997

 

 

 

14,381

 

13,592

 

Noninterest income

 

2,083

 

953

 

900

 

 

 

3,036

 

1,804

 

Noninterest expense

 

5,648

 

5,523

 

7,604

 

 

 

11,171

 

13,409

 

Income before income tax expense

 

3,139

 

3,107

 

293

 

 

 

6,246

 

1,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

633

 

655

 

(42

)

 

 

1,287

 

280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

2,506

 

$

2,452

 

$

335

 

 

 

$

4,959

 

$

1,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

13,527

 

13,527

 

 

 

 

13,527

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic(1) 

 

0.20

 

0.20

 

N/A

 

 

 

0.40

 

N/A

 

      Diluted(1)

 

0.20

 

0.20

 

N/A

 

 

 

0.40

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECTED FINANCIAL CONDITION DATA:

June 30, 2020

 

March 31, 2020

 

December 31, 2019

 

 

 

 

 

 

 

(In thousands, except for per share amounts)

Total assets

$

1,140,213

 

$

1,007,616

 

$

986,042

Cash and cash equivalents

110,606

 

27,456

 

40,597

Investment securities

234,524

 

252,661

 

217,701

Loans and leases, net of allowance

752,923

 

687,054

 

687,258

Premises and equipment, net

14,440

 

14,007

 

14,087

Federal Home Loan Bank stock

9,080

 

8,631

 

7,600

Other assets

18,640

 

17,807

 

18,798

Deposits

739,131

 

605,235

 

617,219

Borrowings

180,000

 

182,000

 

154,000

Total stockholder’s equity

196,136

 

193,196

 

187,787

 

 

 

 

 

 

Book value (GAAP)

$

196,136

 

$

193,196

 

$

187,787

Tangible book value (non-GAAP)

 196,136

 

193,196

 

187,787

Book value per share

14.50

 

14.28

 

13.88

Tangible book value per share

14.50

 

14.28

 

13.88


8


The following table summarizes information relating to our loan portfolio at June 30, 2020, March 31, 2020 and December 31, 2019:

 

 

June 30,

 

March 31,

 

December 31,

 

 

2020

 

2020

 

2019

 

(In thousands)

 

Commercial mortgage

$

242,036

 

$

238,878

 

$

229,410

 

Commercial and industrial

 

141,184

 

76,002

 

84,549

 

Construction and development

 

62,372

 

58,051

 

53,426

 

Multi-family

 

58,709

 

58,101

 

66,002

 

Residential mortgage

 

126,146

 

132,662

 

131,294

 

Home equity

 

6,522

 

6,606

 

6,996

 

Direct financing leases

 

114,352

 

111,691

 

109,592

 

Consumer

 

12,550

 

12,828

 

13,534

 

 

 

 

 

 

 

 

 

Total loans and leases

$

763,871

 

$

694,819

 

$

694,803

 

 

 

 

 

 

 

 

 

 

The following table summarizes information relating to changes in deposits at June 30, 2020, March 31, 2020 and December 31, 2019:

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

 

 

2020

 

2020

 

2019

 

(In thousands)

 

Noninterest-bearing demand

$

89,922

 

$

62,491

 

$

60,297

 

Interest-bearing demand

 

120,643

 

106,804

 

103,978

 

Savings and money market

 

185,365

 

162,935

 

171,529

 

Non-brokered time deposits

 

222,513

 

225,047

 

224,765

 

Brokered time deposits

 

120,688

 

47,958

 

56,650

 

 

 

 

 

 

 

 

 

Total deposits

$

739,131

 

$

605,235

 

$

617,219

 

 

 

 

 

 

 

 

 


9


 

 

 

 

Three Months Ended June 30,

 

 

 

2020

 

2019

 

 

 

 

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

 

 

$

747,865

 

  

$

9,308

 

4.98

%

 

$

687,023

 

 

$

 

9,163

 

5.33

%

 

Securities

 

 

 

247,594

 

 

 

1,120

 

1.81

%

 

 

150,640

 

 

 

 

867

 

2.30

%

 

FHLB stock

 

 

 

9,035

 

 

 

58

 

2.57

%

 

 

7,143

 

 

 

 

91

 

5.10

%

 

Cash and cash equivalents and other

 

 

 

54,806

 

 

 

11

 

0.08

%

 

 

70,744

 

 

 

 

278

 

1.57

%

 

  Total interest-earning assets

 

 

 

1,059,300

 

 

 

10,497

 

3.96

%

 

 

915,550

 

 

 

 

10,399

 

4.54

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and money market accounts

 

 

 

183,415

 

 

 

253

 

0.55

%

 

 

180,514

 

 

 

 

346

 

0.77

%

 

Interest-bearing checking accounts

 

 

 

115,091

 

 

 

66

 

0.23

%

 

 

102,280

 

 

 

 

98

 

0.38

%

 

Certificate accounts

 

 

 

303,805

 

 

 

1,385

 

1.82

%

 

 

317,299

 

 

 

 

1,663

 

2.10

%

 

Borrowings

 

 

 

181,824

 

 

 

770

 

1.69

%

 

 

147,375

 

 

 

 

809

 

2.20

%

 

  Total interest-bearing liabilities

 

 

 

784,135

 

 

 

2,474

 

1.26

%

 

 

747,468

 

 

 

 

2,916

 

1.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

 

$

8,023

 

 

 

 

 

 

 

 

$

 

7,483

 

 

 

 

Net earning assets

 

 

$

275,165

 

 

 

 

 

 

 

 

$

168,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread(1)

 

 

 

 

 

 

 

 

 

2.70

%

 

 

 

 

 

 

 

 

 

2.98

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(2)

 

 

 

 

 

 

 

 

 

3.03

%

 

 

 

 

 

 

 

 

 

3.27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to

  average interest-bearing liabilities

 

 

 

135.09

%

 

 

 

 

 

 

 

 

122.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

___________________

(1)  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)  Net interest margin represents net interest income divided by average total interest-earning assets.


10


 

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

2019

 

 

 

 

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

 

 

$

692,055

 

  

$

18,372

 

5.31

%

 

$

677,688

 

 

$

 

17,929

 

5.29

%

 

Securities

 

 

 

235,947

 

 

 

2,302

 

1.95

%

 

 

146,667

 

 

 

 

1,715

 

2.34

%

 

FHLB stock

 

 

 

8,479

 

 

 

139

 

3.28

%

 

 

6,916

 

 

 

 

183

 

5.29

%

 

Cash and cash equivalents and other

 

 

 

43,541

 

 

 

136

 

0.62

%

 

 

40,379

 

 

 

 

328

 

1.62

%

 

  Total interest-earning assets

 

 

 

980,022

 

 

 

20,949

 

4.28

%

 

 

871,650

 

 

 

 

20,155

 

4.62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and money market accounts

 

 

 

173,352

 

 

 

545

 

0.63

%

 

 

171,736

 

 

 

 

628

 

0.73

%

 

Interest-bearing checking accounts

 

 

 

109,622

 

 

 

148

 

0.27

%

 

 

100,834

 

 

 

 

163

 

0.32

%

 

Certificate accounts

 

 

 

291,449

 

 

 

2,836

 

1.95

%

 

 

314,309

 

 

 

 

3,203

 

2.04

%

 

Borrowings

 

 

 

172,945

 

 

 

1,510

 

1.75

%

 

 

141,713

 

 

 

 

1,559

 

2.20

%

 

  Total interest-bearing liabilities

 

 

 

747,368

 

 

 

5,039

 

1.35

%

 

 

728,592

 

 

 

 

5,553

 

1.52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

 

$

15,910

 

 

 

 

 

 

 

 

$

 

14,602

 

 

 

 

Net earning assets

 

 

$

232,654

 

 

 

 

 

 

 

 

$

143,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread(1)

 

 

 

 

 

 

 

 

 

2.93

%

 

 

 

 

 

 

 

 

 

3.10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(2)

 

 

 

 

 

 

 

 

 

3.25

%

 

 

 

 

 

 

 

 

 

3.35

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to

  average interest-bearing liabilities

 

 

 

131.13

%

 

 

 

 

 

 

 

 

119.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

_______________________________

(1)  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)  Net interest margin represents net interest income divided by average total interest-earning assets.


11


 

 

At and for the Three Months Ended

 

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

Selected Financial Ratios and Other Data:

2020

 

 

2020

 

 

2019

 

 

2019

 

 

2019

 

 

Performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

0.93

 

%

0.98

 

%

(5.17

)

%

(1.28

)

%

0.14

 

%

Return on average equity (annualized)

5.15

 

%

5.15

 

%

(25.85

)

%

(8.92

)

%

1.49

 

%

Yield on interest-earning assets

3.96

 

%

4.40

 

%

4.48

 

%

4.53

 

%

4.54

 

%

Rate paid on interest-bearing liabilities

1.26

 

%

1.44

 

%

1.53

 

%

1.62

 

%

1.56

 

%

Average interest rate spread

2.70

 

%

2.96

 

%

2.95

 

%

2.91

 

%

2.98

 

%

Net interest margin (annualized)(1)

3.03

 

%

3.32

 

%

3.33

 

%

3.31

 

%

3.27

 

%

Operating expense to average total assets (annualized)

2.10

 

%

2.22

 

%

10.35

 

%

4.90

 

%

3.09

 

%

Efficiency ratio(2)

55.94

 

%

62.97

 

%

286.09

 

%

138.36

 

%

91.11

 

%

Average interest-earning assets to average interest-bearing liabilities

135.09

 

%

133.79

 

%

133.95

 

%

133.76

 

%

122.49

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset quality ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets to total assets(3)

0.38

 

%

0.43

 

%

0.39

 

%

0.44

 

%

0.39

 

%

Non-performing loans and leases to total gross loans and leases(4)

0.57

 

%

0.61

 

%

0.55

 

%

0.59

 

%

0.60

 

%

Allowance for loan and lease losses to non-performing loans and leases(4)

197.47

 

%

171.23

 

%

185.97

 

%

166.90

 

%

151.94

 

%

Allowance for loan and lease losses to total loans and leases

1.12

 

%

1.05

 

%

1.02

 

%

0.98

 

%

0.90

 

%

Net charge-offs (annualized) to average outstanding loans and leases during the period

0.06

 

%

0.00

 

%

0.40

 

%

0.05

 

%

0.02

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to total assets at end of period

17.20

 

%

19.17

 

%

19.04

 

%

20.95

 

%

8.40

 

%

Average equity to average assets

18.13

 

%

19.11

 

%

19.98

 

%

14.29

 

%

9.16

 

%

Common equity tier 1 capital (to risk weighted assets)(5)

18.98

 

%

18.20

 

%

18.54

 

%

20.61

 

%

11.80

 

%

Tier 1 leverage (core) capital (to adjusted tangible assets)(5)

13.43

 

%

14.31

 

%

14.56

 

%

15.71

 

%

9.33

 

%

Tier 1 risk-based capital (to risk weighted assets)(5)

18.98

 

%

18.20

 

%

18.54

 

%

20.61

 

%

11.80

 

%

Total risk-based capital (to risk weighted assets)(5)

20.07

 

%

19.14

 

%

19.46

 

%

21.53

 

%

12.64

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of full-service offices

12

 

 

12

 

 

12

 

 

12

 

 

12

 

 

Full-time equivalent employees

172

 

 

172

 

 

166

 

 

163

 

 

166

 

 

 

 

 

(1)

Net interest income divided by average interest earning assets.

 

(2)

Total other (non-interest) expenses as a percentage of net interest income and total other (non-interest) income, excluding net securities transactions.

 

(3)

Non-performing assets consist of non-accruing loans and leases, accruing loans and leases more than 90 days past due and foreclosed assets.

 

(4)

Non-performing loans and leases consist of non-accruing loans and leases and accruing loans and leases more than 90 days past due.

 

(5)

Capital ratios are for First Bank Richmond.


12


Contacts

 

Richmond Mutual Bancorporation, Inc.

Garry D. Kleer, Chairman, President and Chief Executive Officer

Donald A. Benziger, Exec. VP/Chief Financial Officer
(765) 962-2581


13

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