Richmond Mutual Bancorporation, Inc. Announces 2026 Third Quarter Financial Results

Earnings fell sharply as merger-driven growth was offset by surging credit costs and expenses.

What the company is saying

Richmond Mutual Bancorporation, Inc. presents its Q3 2026 results as a period of major transition, emphasizing the completed merger with Farmers Bancorp as a transformative event that expanded the balance sheet and boosted net interest income. The company, led by Chairman and CEO Garry Kleer, frames the quarter as one of operational integration and scale, but acknowledges that earnings were negatively impacted by a spike in provision for credit losses and higher noninterest expenses. Management attributes the profit decline primarily to $6.1 million in credit loss provisions—driven by $6.1 million in net charge-offs, including a $4.5 million partial charge-off on a nonaccruing commercial real estate loan and an $803,000 charge-off on a commercial and industrial loan—as well as $3.0 million in nonrecurring merger-related costs. The announcement highlights a $1.6 million preliminary bargain purchase gain from the acquisition but does not overstate its significance. The tone is measured, with forward-looking remarks limited to a focus on integration and realizing strategic benefits, without making specific profit or synergy projections.

What the data suggests

The disclosed figures show net income for Q3 2026 dropped to $1.7 million ($0.11 per share), down from $2.2 million ($0.22) in Q2 2026 and $3.6 million ($0.36) in Q3 2025. The nine-month net income was $6.8 million ($0.56 per share), compared to $8.2 million ($0.82) for the same period in 2025. The main driver of this decline was a surge in the provision for credit losses to $6.1 million, up from $823,000 in the prior quarter and $269,000 a year ago, reflecting substantial net charge-offs and rising non-performing loans. Noninterest expense nearly doubled year-over-year to $20.0 million, including $3.0 million in merger-related costs and $1.8 million in amortization of core deposit intangibles. Despite these pressures, net interest income jumped 89% quarter-over-quarter to $22.8 million, and assets rose to $2.60 billion from $1.53 billion at year-end, both due to the merger. The allowance for credit losses increased to $25.4 million but now covers a higher base of non-performing loans ($32.2 million, or 1.59% of loans). Capital ratios remain solid, with an equity-to-assets ratio of 8.81% and a Tier 1 leverage ratio of 9.99%, above regulatory minimums. The data indicate that while the merger delivered immediate scale, it also brought significant credit and integration costs that have eroded short-term profitability.

Analysis

The announcement is a factual quarterly earnings release with comprehensive disclosure of realised financial results, including net income, EPS, credit loss provisions, charge-offs, and the impact of the Farmers Bancorp merger. The only forward-looking language is a generic statement about focusing on integration and realising strategic benefits, which is not exaggerated or promotional. The data show a significant deterioration in profitability (net income and EPS down sharply year-over-year and quarter-over-quarter), driven by higher credit costs and merger-related expenses, despite strong growth in assets and net interest income. The merger is a large capital event, but its immediate impact has been negative for earnings. There is no narrative inflation or overstatement; the tone is measured and consistent with the underlying results.

Risk flags

• ●Credit quality deterioration is a major risk, as evidenced by the $6.1 million provision for credit losses and $6.1 million in net charge-offs this quarter, including a $4.5 million partial charge-off on a commercial real estate loan and an $803,000 charge-off on a commercial and industrial loan. Rising non-performing loans ($32.2 million, 1.59% of loans) suggest further potential for credit losses.
• ●Merger integration risk is elevated, with $3.0 million in nonrecurring merger-related expenses and $1.8 million in amortization of core deposit intangibles impacting results. The full operational and cultural integration of Farmers Bancorp may bring additional costs or disruptions in future quarters.
• ●Profitability risk is acute, as net income has declined sharply despite significant growth in assets and net interest income. The combined entity must demonstrate that it can translate scale into sustainable earnings and efficiency, or risk further erosion of shareholder value.
• ●Expense control is a concern, with noninterest expense rising $11.9 million year-over-year to $20.0 million. If cost synergies from the merger are not realized quickly, ongoing elevated expenses could continue to pressure margins.
• ●Capital adequacy appears strong for now, with an equity-to-assets ratio of 8.81% and a Tier 1 leverage ratio of 9.99%, but further credit losses or integration setbacks could weaken these metrics and limit strategic flexibility.

Bottom line

Richmond Mutual Bancorporation's Q3 2026 earnings show that the Farmers Bancorp merger has delivered immediate scale—assets, loans, and deposits have all nearly doubled—but at the cost of sharply lower profitability. Net income and EPS have fallen due to a spike in credit loss provisions, large net charge-offs, and substantial merger-related and integration expenses. While capital ratios remain healthy and net interest income has surged, the near-term outlook depends on management's ability to stabilize credit quality and realize cost efficiencies from the merger. The company's narrative is credible and transparent, with clear attribution of profit pressures to specific events and no exaggerated forward-looking claims. Investors should focus on future quarters for evidence of improved credit trends, expense discipline, and tangible synergy realization. The most important takeaway is that scale alone is not translating into higher earnings—execution on integration and credit management will determine whether this merger creates or destroys shareholder value.

Announcement summary

(NASDAQ: RMBI) Richmond Mutual Bancorporation, Inc. reported net income of $1.7 million, or $0.11 diluted earnings per share, for the third quarter of 2026. This compares to net income of $2.2 million, or $0.22 per share, in the second quarter of 2026, and $3.6 million, or $0.36 per share, in the third quarter of 2025. The decrease in net income was primarily due to a higher provision for credit losses and increased noninterest expense. The provision for credit losses totaled $6.1 million in Q3 2026, compared to $823,000 in Q2 2026 and $269,000 in Q3 2025. Net charge-offs during the quarter were $6.1 million, including a $4.5 million partial charge-off on a nonaccruing commercial real estate loan and an $803,000 charge-off on a commercial and industrial loan. Noninterest expense included $3.0 million of nonrecurring merger-related expenses associated with the acquisition of Farmers Bancorp. The company recognized a preliminary bargain purchase gain of $1.6 million related to the Farmers Bancorp acquisition. Net income for the nine months ended September 30, 2026 was $6.8 million, or $0.56 per share, compared to $8.2 million, or $0.82 per share, for the same period in 2025. The merger with Farmers Bancorp was completed on July 1, 2026, with The Farmers Bank merging into First Bank Richmond, and the combined bank now operating as First Bank Midwest. Net interest income increased by $10.8 million, or 89.2%, to $22.8 million for Q3 2026 from $12.1 million in Q2 2026, and by $11.6 million, or 102.3%, from $11.3 million in Q3 2025. Annualized net interest margin was 3.68% for Q3 2026, compared to 3.22% in Q2 2026 and 3.07% in Q3 2025. Noninterest income increased $3.0 million to $4.6 million for Q3 2026, compared to $1.6 million in Q2 2026, and increased $3.3 million from $1.3 million in Q3 2025. Noninterest expense increased $9.8 million to $20.0 million for Q3 2026, compared to $10.2 million in Q2 2026, and increased $11.9 million from $8.1 million in Q3 2025. Assets totaled $2.60 billion at September 30, 2026, compared to $1.55 billion at June 30, 2026 and $1.53 billion at December 31, 2025. Loans and leases, net of allowance for credit losses, totaled $2.00 billion at September 30, 2026, compared to $1.21 billion at June 30, 2026, and $1.18 billion at December 31, 2025. Non-performing loans and leases totaled $32.2 million, or 1.59% of total loans and leases, at September 30, 2026, compared to $21.8 million, or 1.78%, at June 30, 2026, and $17.4 million, or 1.46%, at December 31, 2025. The allowance for credit losses totaled $25.4 million, or 1.25% of total loans and leases, at September 30, 2026, compared to $17.0 million, or 1.39%, at June 30, 2026, and $16.5 million, or 1.38%, at December 31, 2025. Deposits totaled $2.09 billion at September 30, 2026, compared to $1.15 billion at June 30, 2026, and $1.11 billion at December 31, 2025. Noninterest-bearing deposits were $351.4 million, or 16.9% of total deposits, at September 30, 2026. Stockholders' equity totaled $228.9 million at September 30, 2026, compared to $148.3 million at June 30, 2026, and $145.8 million at December 31, 2025. The company's equity to assets ratio was 8.81% at September 30, 2026. Book value per share was $13.66 at September 30, 2026, compared to $14.11 at June 30, 2026 and $13.88 at December 31, 2025. The Bank's Tier 1 leverage ratio was 9.99% at September 30, 2026, exceeding the 8.0% CBLR requirement. Effective September 30, 2026, the Bank began reporting its regulatory capital status through the Community Bank Leverage Ratio framework. Interest income increased $16.7 million to $38.6 million in Q3 2026 compared to Q3 2025, primarily due to a $1.02 billion increase in the average balance of interest-earning assets. Interest income on loans and leases increased $14.6 million to $34.3 million for Q3 2026 compared to Q3 2025. Interest income on investment securities increased $1.3 million to $2.9 million for Q3 2026. Dividends on FHLB stock increased $203,000 to $517,000 for Q3 2026. Interest income on cash and cash equivalents increased $623,000 to $826,000 for Q3 2026. Interest expense increased $5.2 million to $15.7 million for Q3 2026 compared to Q3 2025. Interest expense on deposits increased $4.9 million to $12.7 million for Q3 2026. Interest expense on borrowings increased $266,000 to $3.0 million for Q3 2026. The average rate paid on interest-bearing liabilities was 3.17% in Q3 2026. The average rate paid on interest-bearing deposits was 2.98% in Q3 2026. The average rate paid on borrowings was 4.26% in Q3 2026. The company recognized an income tax benefit of $482,000 for Q3 2026, compared to income tax expense of $645,000 for Q3 2025.

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