Richmond Mutual Completes Farmers Bancorp Combination
Net interest income rose 5.5% to $12.1 million as the margin reached 3.22%, while $1.9 million of merger costs and a higher credit-loss provision cut earnings to $0.22 a share.
Richmond Mutual Bancorporation, Inc. (RMBI), parent of First Bank Richmond, completed its previously announced merger with The Farmers Bancorp on July 1, 2026, after The Farmers Bank merged into First Bank Richmond. The combined bank is operating as First Bank Midwest. Results through June 30, 2026, exclude Farmers Bancorp; those operations will first appear in the quarter ending September 30, 2026.
Net income was $2.2 million, or $0.22 a share, compared with $2.8 million, or $0.28 a share, in the first quarter of 2026. The company said the decline was primarily due to $1.9 million of nonrecurring merger-related expenses and a higher provision for credit losses, partially offset by higher net interest income and noninterest income.
Net interest income rose $628,000, or 5.5%, to $12.1 million for the three months ended June 30, 2026. The average interest rate spread widened 13 basis points, partially offset by a $3.0 million decrease in average net earning assets. Annualized net interest margin expanded 12 basis points to 3.22%, from 3.10% in the prior quarter. The company attributed the margin gain to a higher average balance of interest-earning assets, continued improvement in funding costs, and a favorable change in the interest rate spread.
Interest income on loans and leases increased $679,000, or 3.6%, to $19.8 million, on a nine basis point rise in the average loan yield to 6.55% and a $24.7 million increase in the average loan balance. Interest expense on deposits decreased $85,000, or 1.2%, to $7.2 million, as the average rate paid on interest-bearing deposits fell seven basis points to 2.82%. Interest expense on FHLB borrowings increased $194,000, or 8.0%, to $2.6 million, on an 11 basis point rise in the average rate to 4.12% and a $12.5 million increase in the average balance to $253.6 million.
A provision for credit losses of $823,000 was recorded, compared with $693,000 in the first quarter. Net charge-offs were $557,000. Nonperforming loans and leases totaled $21.8 million, or 1.78% of total loans, at June 30, 2026, compared with $17.6 million, or 1.48%, at March 31, 2026. Nonaccrual loans and leases increased $6.9 million, or 52.2%, to $20.0 million from $13.2 million at year-end 2025, primarily due to a $2.4 million multi-family loan already 90 days or more past due at December 31, 2025, and a $3.5 million multi-family loan placed on nonaccrual as of June 30, 2026 after a troubled loan modification. The allowance for credit losses totaled $17.0 million, or 1.39% of loans, and covered 77.9% of nonperforming loans and leases at June 30, 2026, compared with 94.6% at December 31, 2025.
Noninterest income increased $282,000, or 21.7%, to $1.6 million, primarily from higher other income, including increased wealth management income. Other income rose $243,000, or 62.0%, to $635,000 on increased estate fees. Noninterest expense increased $1.5 million, or 16.8%, to $10.2 million, primarily due to the $1.9 million of merger-related costs, consisting primarily of professional fees and other transaction-related costs. Salaries and employee benefits increased $163,000, or 3.6%, to $4.7 million.
Assets totaled $1.6 billion at June 30, 2026. Loans and leases, net of allowance, totaled $1.2 billion. Investment securities decreased $7.0 million, or 2.8%, to $247.6 million from December 31, 2025, as $7.4 million in maturities and principal repayments were redeployed to support loan growth. Deposits totaled $1.1 billion. Brokered time deposits were $264.3 million, or 23.0% of total deposits. Stockholders’ equity was $148.3 million, and the equity-to-assets ratio was 9.55%. The bank’s Tier 1 capital to total assets was 10.90%. Book value and tangible book value were each $14.11 a share.
Chairman and Chief Executive Officer Garry Kleer said second-quarter results reflected continued improvement in core operating performance, with growth in net interest income and expansion of the net interest margin versus both the prior quarter and the year-earlier period. He said the company entered the next phase from a position of financial strength and welcomed Christopher Cook as president. Cook said the immediate priority is a successful integration.
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