RICHMOND, INDIANA (October 20, 2022) – Richmond Mutual Bancorporation, Inc., a Maryland corporation (the “Company”) (NASDAQ: RMBI), parent company of First Bank Richmond (the “Bank”), today announced net income of $3.2 million, or $0.29 diluted earnings per share, for the third quarter of 2022, compared to net income of $3.5 million, or $0.31 diluted earnings per share, for the second quarter of 2022, and net income of $3.1 million, or $0.27 diluted earnings per share, for the third quarter of 2021. Diluted earnings per share decreased 6.5% and increased 7.4% for the third quarter of 2022 as compared to the second quarter of 2022 and the third quarter of 2021, respectively.

Garry Kleer, Chairman, President and Chief Executive Officer, commented, “In the third quarter of 2022, despite unprecedented increases in short-term interest rates by the Federal Reserve, we continued to grow our loan and lease portfolios while maintaining profitability and returning excess capital to shareholders through dividends and share repurchases. As we enter the final quarter of the year, we believe we are well-positioned to deliver for our shareholders while continuing to invest in our people, businesses and communities.”

Third Quarter Performance Highlights:

•Assets totaled $1.3 billion at September 30, 2022, June 30, 2022 and December 31, 2021.

•Loans and leases, net of allowance, totaled $915.5 million at September 30, 2022, compared to $891.9 million at June 30, 2022, and $832.8 million at December 31, 2021.

•Nonperforming loans and leases totaled $8.5 million, or 0.92% of total loans and leases, at September 30, 2022, compared to $8.1 million, or 0.89% at June 30, 2022, and $8.0 million, or 0.95% at December 31, 2021.

•The allowance for loan and lease losses totaled $12.6 million, or 1.35% of total loans and leases outstanding, at September 30, 2022, compared to $12.4 million, or 1.37% of total loans and leases outstanding, at June 30, 2022 and $12.1 million, or 1.43% of total loans and leases outstanding, at December 31, 2021.

•The provision for loan and lease losses totaled $200,000 in the quarters ended September 30 and June 30, 2022, and totaled $500,000 in the third quarter of 2021.

•Deposits totaled $958.6 million at September 30, 2022, compared to $945.3 million at June 30, 2022 and $900.2 million at December 31, 2021. At September 30, 2022, noninterest bearing deposits totaled $114.8 million or 12.0% of total deposits, compared to $116.8 million or 12.4% of total deposits at June 30, 2022, and $114.3 million or 12.7% of total deposits at December 31, 2021.

•Stockholders’ equity totaled $125.0 million at September 30, 2022, compared to $138.9 million at June 30, 2022, and $180.5 million at December 31, 2021. The Company’s equity to assets ratio was 9.8% at September 30, 2022.

•Net interest income decreased $36,000 or 0.3% to $10.5 million for the three months ended September 30, 2022, compared to net interest income of $10.5 million for the prior quarter, and increased $555,000 or 5.6% from $10.0 million for the comparable quarter in 2021.

•Annualized net interest margin was 3.39% for the current quarter, compared to 3.45% in the preceding quarter and 3.42% the third quarter a year ago.

•The Company repurchased 45,689 shares of common stock at an average price of $14.17 per share during the quarter ended September 30, 2022.

•The Bank’s Tier 1 capital to total assets was 11.29%, well in excess of all regulatory requirements at September 30, 2022.

Net interest income before the provision for loan and lease losses decreased $36,000, or 0.3%, to $10.5 million in the third quarter of 2022, compared to $10.5 million in the second quarter of 2022, and increased $555,000, or 5.6%, from $10.0 million in the third quarter of 2021. The decrease from the second quarter of 2022 was due to a 10 basis point decrease in the average interest rate spread, offset by a $15.5 million increase in average interest earning assets during the third quarter of 2022. The increase from the comparable quarter in 2021 was due to an increase in average interest earning assets of $74.1 million during the third quarter of 2022 versus the comparable quarter of 2021.

Interest income increased $722,000, or 5.8%, to $13.2 million during the quarter ended September 30, 2022, compared to the quarter ended June 30, 2022 and increased $1.3 million, or 10.7%, compared to the quarter ended September 30, 2021. Interest income on loans and leases increased $620,000, or 5.8%, to $11.3 million for the quarter ended September 30, 2022 compared to $10.7 million in the second quarter of 2022, due to a $32.8 million increase in the average balance of loans and leases, and an increase of ten basis points to 4.98% in the average yield earned on loans and leases. Interest income on loans and leases increased $864,000, or 8.3%, in the third quarter of 2022 compared to the third quarter of 2021, due to an increase in the average balance of loans and leases of $124.1 million, partially offset by a 34 basis point decrease in the average loan and lease yield.

Interest income on investment securities, excluding FHLB stock, increased $55,000, or 3.3%, to $1.7 million during the quarter ended September 30, 2022, compared to the quarter ended June 30, 2022, and increased $324,000, or 23.4%, from the comparable quarter in 2021. The increase in interest income on investment securities, excluding FHLB stock, in the third quarter of 2022 from the second quarter of 2022 was due to a 15 basis point increase in the average yield earned on investment securities to 2.20%, partially offset by a $11.8 million decrease in average balance of investment securities. The increase in interest on investment securities, excluding FHLB stock, in the third quarter of 2022 from the third quarter of 2021 was due to a 63 basis point increase in the average yield earned on investment securities, partially offset by a $42.9 million decrease in average balance of investment securities.

Interest expense increased $758,000, or 39.9%, to $2.7 million for the quarter ended September 30, 2022 compared to the quarter ended June 30, 2022 and increased $715,000, or 36.8%, compared to the quarter ended September 30, 2021. Interest expense on deposits increased $524,000, or 41.1%, to $1.8 million for the quarter ended September 30, 2022, compared to the previous quarter and increased $545,000, or 43.5%, from the comparable quarter in 2021. The increase from the previous quarter was primarily due to a 24 basis points increase in the average rate paid on interest-bearing deposits and, to a lesser extent, a $9.7 million increase in average balance of interest-bearing deposits. The increase from the comparable quarter in 2021 was due to an increase of $122.2 million in average balance of, and a 16 basis point increase in the average rate paid on, interest-bearing deposits. The average rate paid on interest-bearing deposits was 0.86% for the quarter ended September 30, 2022, compared to 0.62% and 0.70% for the quarters ended June 30, 2022 and September 30, 2021, respectively. Interest expense on FHLB borrowings increased $234,000, or 37.5%, to $859,000 for the third quarter of 2022 compared to the previous quarter and increased $170,000, or 24.7%, from the comparable quarter in 2021 due to increases in both the average rate paid on and the outstanding balance of FHLB borrowings. The average balance of FHLB borrowings totaled $182.5 million during the quarter ended September 30, 2022, compared to $170.3 million and $179.4 million for the quarters ended June 30, 2022 and September 30, 2021, respectively. The average rate paid on FHLB borrowings was 1.88% for the quarter ended September 30, 2022, 1.47% for the quarter ended June 30, 2022, and 1.54% for the third quarter of 2021.

Annualized net interest margin decreased to 3.39% for the third quarter of 2022, compared to 3.45% for the second quarter of 2022 and 3.42% for the third quarter of 2021. The decrease in the net interest margin for the third quarter of 2022 compared to the second quarter of 2022 and the comparable quarter in 2021 was primarily due to the rate paid on interest-bearing liabilities increasing faster than the yield on interest-earning assets.

The provision for loan and lease losses totaled $200,000 for the quarters ended September 30, 2022 and June 30, 2022, and $500,000 for the quarter ended September 30, 2021. Net charge-offs during the third quarter of 2022 were $25,000, compared to net charge-offs of $136,000 during the second quarter of 2022 and $82,000 in the third quarter of 2021. Uncertainties relating to the level of our allowance for loan losses remains heightened as a result of continued concern about a potential recession due to inflation, rising interest rates, stock market volatility and the Russia-Ukraine conflict.

Total noninterest income increased $7,000, or 0.6%, to $1.2 million for the quarter ended September 30, 2022 compared to the quarter ended June 30, 2022, and increased $39,000, or 3.4%, from the comparable quarter in 2021. The increase in noninterest income in the third quarter of 2022 from the second quarter of 2022 occurred despite a decrease in net gains on loan and lease sales. Net gains on loan and lease sales decreased $106,000, or 47.6%, to $116,000 in the third quarter of 2022 compared to the second quarter of 2022, which were offset by increases in loan and lease servicing fees, and fees earned from our participation in a loan hedging program with a correspondent bank. Loan and lease servicing fees increased $58,000 in the third quarter of 2022 compared to the second quarter of 2022 as a recovery of $114,000 to mortgage servicing rights was recorded in the third quarter of 2022 compared to a recovery of $76,000 in the second quarter of 2022, due to rising interest rates increasing the expected duration of our loans. In addition, service fees on deposit accounts increased $12,000, or 4.6%, to $260,000 for the quarter ended September 30, 2022, compared to $248,000 for the second quarter of 2022. Other income increased $47,000 in the third quarter of 2022 compared to the second quarter of 2022 primarily due to fees earned from our participation in a loan hedging program with a correspondent bank, partially offset by a reduction in letter of credit fees.

Total noninterest income increased $39,000, or 3.4% from the comparable quarter in 2021, due primarily to a $417,000, or 230.0%, increase in loan and lease servicing fees. Loan and lease servicing fees in the third quarter of 2022 reflected a recovery of $114,000 to mortgage servicing rights compared to an impairment charge of $251,000 recorded in the third quarter of 2021. Net gains on loan and lease sales decreased $441,000, or 79.1%, to $116,000 as mortgage banking activity declined primarily due to lower refinancing activity, a lower supply of houses for sale in the Bank’s market area, and increases in residential mortgage rates. Partially offsetting these decreases were increases in card fee income and service fees on deposit accounts. Card fee income increased $32,000, or 12.0%, in the third quarter of 2022 due to higher card usage. Service fees on deposit accounts increased $24,000, or 10.1%, in the third quarter of 2022 from the comparable quarter in 2021. Other income increased $78,000, or 8.7% in the third quarter of 2022 compared to the comparable quarter of 2021 primarily due to the fees earned from our participation in a loan hedging program with a correspondent bank.

Total noninterest expense increased $565,000, or 7.9%, to $7.7 million for the three months ended September 30, 2022, compared to the second quarter of 2022, and increased $878,000, or 12.8% compared to the same period in 2021. Salaries and employee benefits increased $195,000, or 4.3%, to $4.7 million for the quarter ended September 30, 2022, compared to the second quarter of 2022, and increased $493,000 compared to the quarter ended September 30, 2021. The increase in salaries and benefits in the third quarter of 2022 from the second quarter of 2022 and the quarter ended September 30, 2021 was primarily due to annual merit increases and the hiring of additional staff. Data processing fees increased $176,000, or 30.9%, to $744,000 for the quarter ended September 30, 2022, compared to the second quarter of 2022, and increased $231,000, or 45.0% compared to the third quarter of 2021. The increase in data processing fees during the current quarter compared to the second quarter of 2022 and the comparable quarter in 2021, was primarily due to continued implementation and roll out of new digital banking modules during the third quarter. The Company’s change to a new digital banking provider in the fourth quarter of 2021 also contributed to the increase in data processing fees during the current quarter compared to the comparable quarter in 2021. Other expenses increased $175,000, or 22.1% in the third quarter of 2022 compared to the prior quarter, and increased $76,000, or 8.7%, compared to the same quarter of 2021. The increase in other expenses in the third quarter of 2022 from the second quarter of 2022 primarily was due to increased telephone expense and expenses related to employee professional development. The increase in other expenses in the third quarter of 2022 from the same period in 2021 primarily was due to expenses related to employee professional development.

Income tax expense decreased $266,000 during the three months ended September 30, 2022 compared to the quarter ended June 30, 2022, and decreased $61,000 compared to the quarter ended September 30, 2021, due to a lower level of pre-tax income compared to the second quarter of 2022 and a lower effective tax rate. The effective tax rate for the third quarter of 2022 was 16.3% compared to 20.2% in the second quarter of 2022, and 18.0% in the third quarter a year ago. The decrease in the effective tax rate was due to municipal tax-free income representing a greater percentage of our pre-tax income.

Total assets increased $11.0 million, or 0.9%, to $1.3 billion at September 30, 2022 from December 31, 2021. The increase was primarily the result of an $82.6 million, or 9.9%, increase in loans and leases, net of allowance, to $915.5 million and a $12.8 million, or 117.9% increase in other assets to $23.6 million at September 30, 2022. These increases were partially offset by decreases of $79.5 million or 21.7% in investment securities to $287.1 million and $3.7 million or 16.0% in cash and cash equivalents to $19.4 million at September 30, 2022.

The increase in loans and leases was attributable to an increase in commercial real estate loans, construction and development loans, and residential mortgage loans of $21.6 million, $46.4 million and $7.0 million, respectively. Commercial and industrial loans decreased $3.0 million primarily due to a decrease of $8.2 million in Paycheck Protection Program (“PPP”) loans resulting from loan forgiveness by the U.S. Small Business Administration (“SBA”). PPP loans totaled $1.2 million at September 30, 2022. Other assets increased primarily due to a $14.4 million increase in deferred tax assets due to the mark-to-market adjustment on the investment portfolio. The decrease in investment securities primarily was the result of reinvesting only a portion of normal recurring maturities and payments on securities and using the remainder to fund growth in the loan and lease portfolio.

Nonperforming loans and leases, consisting of nonaccrual loans and leases and accruing loans and leases more than 90 days past due, totaled $8.5 million or 0.92% of total loans and leases at September 30, 2022, compared to $8.0 million or 0.95% at December 31, 2021. Accruing loans past due more than 90 days totaled $2.5 million at September 30, 2022, compared to $1.8 million at December 31, 2021.

The allowance for loan and lease losses increased $448,000, or 3.7%, to $12.6 million at September 30, 2022 from $12.1 million at December 31, 2021. At September 30, 2022 the allowance for loan and lease losses totaled 1.35% of total loans and leases outstanding, compared to 1.43% at December 31, 2021. Net charge-offs during the first nine months of 2022 were $152,000 compared to net charge-offs of $167,000 during the comparable period of 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 September 30, 2022, which evaluation included consideration of a potential recession due to inflation, rising interest rates, stock market volatility, and the Russia-Ukraine conflict. Credit metrics are being reviewed and stress testing is being performed on the loan portfolio on an ongoing basis.

Total deposits increased $58.5 million or 6.5% to $958.6 million at September 30, 2022, compared to December 31, 2021. The increase in deposits from December 31, 2021 primarily was due to an increase in brokered time deposits of $72.2 million and savings and money market accounts of $20.7 million, partially offset by a decrease in other time deposits of $32.6 million. Management attributes the shift in funds to customers anticipating potentially higher rates being paid on time deposits in 2022 in connection with the additional expected interest rate hikes by the Federal Reserve this year. Brokered time deposits totaled $194.0 million or 20.2% of total deposits at September 30, 2022. Noninterest-bearing demand deposits remained relatively unchanged at $114.8 million at September 30, 2022 compared to $114.3 million at December 31, 2021, and totaled 12.0% of total deposits at September 30, 2022.

Stockholders’ equity totaled $125.0 million at September 30, 2022, a decrease of $55.5 million or 30.8% from December 31, 2021. The decrease in stockholders’ equity from December 31, 2021 primarily was the result of a reduction in accumulated comprehensive income of $54.0 million due to a greater mark-to-market adjustment to the investment portfolio as a result of higher interest rates, the payment of $3.3 million in dividends to Company stockholders, and the repurchase of $9.6 million of Company common stock, partially offset by net income of $9.7 million.

During the quarter ended September 30, 2022, the Company repurchased a total of 45,689 shares of Company common stock at an average price of $14.17 per share. As of September 30, 2022, the Company had approximately 1,140,574 shares available for repurchase under its existing stock repurchase program. Subsequent to quarter end, the Company repurchased an additional 3,863 shares.

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.

The following table summarizes information relating to our loan and lease portfolio at the dates indicated:

The following table summarizes information relating to our deposits at the dates indicated:

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.

________________________________________________

(1)Net interest rate spread represents the difference between the weighted average yield earned on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.

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

________________________________________________

(1)Net interest rate spread represents the difference between the weighted average yield earned on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.

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

(1)Net interest income divided by average interest-earning assets.

(2)Total noninterest expenses as a percentage of net interest income and total noninterest income, excluding net securities transactions.

(3)Non-performing assets consist of nonaccrual loans and leases, accruing loans and leases more than 90 days past due and foreclosed assets.

(4)Non-performing loans and leases consist of nonaccrual loans and leases and accruing loans and leases more than 90 days past due.

(5)Capital ratios are for First Bank Richmond.

Richmond Mutual Bancorporation, Inc.

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

Donald A. Benziger, Exec. VP/Chief Financial Officer

(765) 962-2581