Financial Performance Overview

Richmond Mutual Bancorporation, the parent company of First Bank Richmond, has reported its financial results for the first quarter of 2025. The company saw a decrease in net income compared to the same period in 2024, primarily due to an increase in the provision for credit losses and higher non-interest expenses. However, the bank was able to grow its loan and deposit portfolios and maintain strong capital and liquidity positions.

Revenue and Profit Trends

For the three months ended March 31, 2025, Richmond Mutual Bancorporation reported net income of $2.0 million, down 16.9% from $2.4 million in the first quarter of 2024. This decrease was largely driven by a $548,000 increase in the provision for credit losses and a $315,000 rise in non-interest expenses.

On the positive side, the company was able to grow its net interest income by 4.3% to $10.3 million. This was due to a 7.0% increase in interest income, which offset a 9.6% rise in interest expense. The net interest margin improved to 2.79% in the first quarter of 2025, up from 2.74% a year earlier, as the bank was able to increase yields on its earning assets faster than the cost of its funding sources.

Non-interest income also saw a modest 3.0% increase to $1.2 million, driven by higher service charges on deposit accounts and other income. However, this was partially offset by declines in net gains on loan and lease sales and loan servicing fees.

Overall, the bank’s profitability was pressured by the need to set aside more funds for potential loan losses and higher operating costs, though it was able to grow its core net interest income.

Strengths and Weaknesses

One of Richmond Mutual Bancorporation’s key strengths is its strong capital position. At March 31, 2025, the bank’s total risk-based capital ratio was 14.04%, well above the 10.0% requirement for a well-capitalized institution. Stockholders’ equity totaled $130.9 million, providing a solid foundation for growth.

The bank also maintains ample liquidity, with $283.4 million in cash, cash equivalents, and available-for-sale investments. It has additional borrowing capacity of $101.1 million from the Federal Home Loan Bank and access to $177.7 million in unencumbered securities that could be used to support further borrowings. This liquidity profile gives the bank flexibility to fund loan demand and manage through potential market disruptions.

One area of weakness is the bank’s elevated provision for credit losses, which increased 300% year-over-year to $731,000. This reflects growth in the commercial real estate and commercial/industrial loan portfolios, which carry higher estimated loss rates, as well as a more cautious outlook on the economic environment. Non-performing loans and leases ticked up slightly to 0.59% of the total portfolio.

Additionally, the bank’s non-interest expenses grew 3.9%, outpacing the 4.3% increase in net interest income. This was driven by higher salaries and benefits, legal/professional fees, and other operating costs. Maintaining disciplined expense control will be important going forward.

Outlook and Conclusion

Looking ahead, Richmond Mutual Bancorporation faces a mixed outlook. On the positive side, the bank’s core lending and deposit-gathering capabilities remain strong, and it is well-positioned from a capital and liquidity standpoint to weather potential economic headwinds.

However, the bank may need to continue building its allowance for credit losses if economic conditions deteriorate further. Inflationary pressures, rising interest rates, and the potential for a recession could all impact the bank’s asset quality and profitability. Careful management of the loan portfolio, funding mix, and operating expenses will be crucial.

Overall, Richmond Mutual Bancorporation delivered a solid if unspectacular performance in the first quarter of 2025. The bank’s fundamentals are sound, but it will need to navigate a challenging economic environment in the months ahead. Shareholders will be looking for the bank to maintain its financial strength while also finding ways to drive sustainable, profitable growth.