Richmond Mutual's Merger Doubles Net Interest Income

The Tip Desk · October 30, 2026 · 4 min read

Net interest income reached $22.8 million in the third quarter after the Farmers Bancorp combination, while a higher provision for credit losses of $6.1 million and increased noninterest expense primarily drove net income down to $1.7 million.

Richmond Mutual Bancorporation, Inc. (RMBI), parent of First Bank Midwest, reported net interest income of $22.8 million for the three months ended September 30, 2026, up $10.8 million, or 89.2%, from $12.1 million in the prior quarter after the July 1 merger with Farmers Bancorp. Versus the third quarter of 2025, net interest income rose $11.6 million, or 102.3%, from $11.3 million.

Net income was $1.7 million, or $0.11 a share, down from $2.2 million, or $0.22 a share, in the second quarter. The company said the decline from both the second quarter of 2026 and the third quarter of 2025 was primarily due to a higher provision for credit losses and noninterest expense. For the nine months ended September 30, 2026, net income was $6.8 million, or $0.56 a share.

The combined company’s annualized net interest margin was 3.68%, compared with 3.22% in the prior quarter and 3.07% a year earlier. The company attributed the year-over-year lift to higher yields and average balances on interest-earning assets from loans acquired in the merger, lower average funding costs, and a higher volume of noninterest-bearing demand deposits. Average interest-earning assets rose $1.02 billion, mainly from the merger, and the average yield on those assets was 6.20%. Average loan balances increased $831.9 million, with the average yield on loans and leases at 6.79%. The average rate paid on interest-bearing liabilities was 3.17%.

A provision for credit losses of $6.1 million was recorded, versus $823,000 in the second quarter and $269,000 in the third quarter of 2025. The company said the increase was primarily to replenish the allowance after $6.1 million of net charge-offs, including a $4.5 million partial charge-off on a nonaccruing commercial real estate loan transferred to other real estate owned and an $803,000 charge-off on a commercial and industrial loan, as well as an increase in non-performing loans. No day-one provision was recorded on acquired loans because the company applied the ASU 2025-08 gross-up approach.

Noninterest income was $4.6 million, including a $1.6 million preliminary bargain purchase gain on the Farmers Bancorp acquisition. Excluding that gain, noninterest income rose $1.6 million, with $415,000 more in service charges on deposit accounts and $1.1 million more in other income primarily related to wealth management. Noninterest expense was $20.0 million, including $3.0 million of nonrecurring merger-related expenses, primarily software and core conversion, and $1.8 million of core deposit intangible amortization.

Assets totaled $2.60 billion at September 30, 2026, versus $1.55 billion at June 30, 2026, after $1.2 billion of assets acquired in the merger. Loans and leases, net of allowance, were $2.00 billion. Deposits were $2.09 billion, including $935.8 million acquired from Farmers Bancorp versus December 31, 2025. Noninterest-bearing deposits were $351.4 million, or 16.9% of total deposits. Brokered time deposits were $268.1 million, or 12.9% of total deposits, versus 21.2% at year-end 2025.

Non-performing loans and leases totaled $32.2 million, or 1.59% of total loans and leases, versus $21.8 million, or 1.78%, at June 30, 2026. The company said the increase included $4.8 million non-performing at acquisition, $1.1 million of acquired loans that later became non-performing, and $8.9 million of legacy loans that became non-performing, primarily commercial and industrial loans tied to one customer relationship. The allowance for credit losses was $25.4 million, or 1.25% of total loans and leases, and covered 78.9% of non-performing loans and leases.

Stockholders’ equity was $228.9 million, with an equity-to-assets ratio of 8.81%. The Bank’s Tier 1 leverage ratio was 9.99%, and the Bank elected the Community Bank Leverage Ratio framework effective September 30, 2026. Book value per share was $13.66. Chairman and Chief Executive Officer Garry Kleer said the company’s focus remains on integrating the two organizations, realizing the strategic benefits of the combination, and continuing to serve customers and communities.