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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024

or
oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission file number: 001-38956
RICHMOND MUTUAL BANCORPORATION, INC.
(Exact name of registrant as specified in its charter)
Maryland
36-4926041
(State or other jurisdiction of incorporation of organization)
(I.R.S. Employer Identification No.)
31 North 9th StreetRichmondIndiana 47374
(Address of principal executive offices; Zip Code)
(765962-2581
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
RMBI
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
[  ]
Accelerated filer
[  ]
Non-accelerated filer
[X]
Smaller reporting company
[X]
Emerging growth company
[X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No [X]
There were 11,065,459 shares of Registrant’s common stock, par value of $0.01 per share, issued and outstanding as of May 14, 2024.




RICHMOND MUTUAL BANCORPORATION, INC. AND SUBSIDIARY
10-Q
TABLE OF CONTENTS
Page
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Controls and Procedures
Legal Proceedings
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Other Information
Exhibits




PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS

Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Balance Sheets
March 31,
2024
December 31,
2023
(Unaudited)
Assets
Cash and due from banks$8,441,313 $8,578,489 
Interest-earning demand deposits11,848,901 11,661,636 
Cash and cash equivalents20,290,214 20,240,125 
Investment securities - available for sale276,347,393 282,688,326 
Investment securities - held to maturity4,658,475 4,949,530 
Loans held for sale85,000 793,500 
Loans and leases, net of allowance for credit losses of $15,825,126 and $15,663,153, respectively
1,123,194,329 1,090,073,198 
Premises and equipment, net13,212,493 13,311,892 
Federal Home Loan Bank stock13,907,100 12,647,100 
Interest receivable5,988,336 5,843,705 
Mortgage-servicing rights1,945,994 1,945,367 
Cash surrender value of life insurance3,787,292 3,764,929 
Other assets24,254,717 24,766,129 
Total assets$1,487,671,343 $1,461,023,801 
Liabilities
Noninterest-bearing deposits$108,805,348 $114,376,777 
Interest-bearing deposits960,837,124 926,763,134 
Total deposits1,069,642,472 1,041,139,911 
Federal Home Loan Bank advances273,000,000 271,000,000 
Advances by borrowers for taxes and insurance701,791 588,371 
Interest payable3,864,170 4,396,952 
Other liabilities8,072,193 9,038,991 
Total liabilities1,355,280,626 1,326,164,225 
Commitments and Contingent Liabilities  
Stockholders' Equity
Common stock, $0.01 par value
Authorized - 90,000,000 shares
Issued and outstanding - 11,115,887 shares and 11,208,500 shares at March 31, 2024 and December 31, 2023, respectively
111,159 112,085 
Additional paid-in capital100,613,827 101,347,566 
Retained earnings88,834,364 87,902,747 
Unearned employee stock ownership plan (ESOP)(11,273,897)(11,457,726)
Accumulated other comprehensive loss(45,894,736)(43,045,096)
Total stockholders' equity132,390,717 134,859,576 
Total liabilities and stockholders' equity$1,487,671,343 $1,461,023,801 
See Notes to Condensed Consolidated Statements.

1


Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31,
20242023
Interest Income
Loans and leases$17,250,722 $13,193,173 
Investment securities2,120,223 1,934,072 
Other139,248 65,553 
Total interest income19,510,193 15,192,798 
Interest Expense
Deposits7,065,764 4,026,675 
Borrowings2,611,648 1,295,313 
Total interest expense9,677,412 5,321,988 
Net Interest Income9,832,781 9,870,810 
Provision for credit losses183,134 170,106 
Net Interest Income After Provision for Credit Losses9,649,647 9,700,704 
Non-interest Income
Service charges on deposit accounts272,931 280,995 
Card fee income290,186 287,258 
Loan and lease servicing fees, including mortgage servicing right impairment127,242 120,072 
Net gains on loan and lease sales119,317 155,563 
Other income319,259 252,836 
Total non-interest income1,128,935 1,096,724 
Non-interest Expenses
Salaries and employee benefits4,573,707 4,242,028 
Net occupancy expenses344,354 350,822 
Equipment expenses236,216 331,323 
Data processing fees906,791 836,513 
Deposit insurance expense403,000 168,000 
Printing and office supplies34,676 36,271 
Legal and professional fees432,553 310,976 
Advertising expense88,723 88,191 
Bank service charges60,706 48,619 
Real estate owned expense1,326  
Other expenses975,454 948,445 
Total non-interest expenses8,057,506 7,361,188 
Income Before Income Tax Expense2,721,076 3,436,240 
Provision for income taxes352,160 532,194 
Net Income$2,368,916 $2,904,046 
Earnings Per Share
Basic$0.23 $0.27 
Diluted$0.23 $0.27 
See Notes to Condensed Consolidated Statements.

2


Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)
Three Months Ended
March 31,
20242023
Net Income$2,368,916 $2,904,046 
Other Comprehensive (Loss) Income
Unrealized (loss) gain on available for sale securities, net of tax benefit (expense) of $757,499, and $(1,640,117), respectively
(2,849,640)6,169,964 
Comprehensive (Loss) Income$(480,724)$9,074,010 
See Notes to Condensed Consolidated Statements.

3


Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

Three Months Ended March 31, 2024
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Loss
Total
Shares
Outstanding
Amount
Balances, December 31, 202311,208,500 $112,085 $101,347,566 $87,902,747 $(11,457,726)$(43,045,096)$134,859,576 
Net income— — — 2,368,916 — — 2,368,916 
Other comprehensive loss— — — — — (2,849,640)(2,849,640)
ESOP shares earned— — (29,661)— 183,829 — 154,168 
Stock based compensation— — 367,484 — — — 367,484 
Common stock dividends ($0.14 per share)
— — — (1,437,299)— — (1,437,299)
Repurchase of common stock(92,613)(926)(1,071,562)— — — (1,072,488)
Balances, March 31, 202411,115,887 $111,159 $100,613,827 $88,834,364 $(11,273,897)$(45,894,736)$132,390,717 


Three Months Ended March 31, 2023
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Loss
Total
Shares
Outstanding
Amount
Balances, December 31, 202211,784,246 $117,842 $106,088,897 $88,122,052 $(12,193,043)$(49,751,175)$132,384,573 
Impact of ASU 2016-13 adoption— — — (3,785,168)— — (3,785,168)
Balances, January 1, 202311,784,246 117,842 106,088,897 84,336,884 (12,193,043)(49,751,175)128,599,405 
Net income— — — 2,904,046 — — 2,904,046 
Other comprehensive income— — — — — 6,169,964 6,169,964 
ESOP shares earned— — (13,318)— 183,829 — 170,511 
Stock based compensation— — 379,408 — — — 379,408 
Common stock dividends ($0.14 per share)
— — — (1,519,855)— — (1,519,855)
Repurchase of common stock(98,553)(985)(1,149,948)— — — (1,150,933)
Balances, March 31, 202311,685,693 $116,857 $105,305,039 $85,721,075 $(12,009,214)$(43,581,211)$135,552,546 

See Notes to Condensed Consolidated Statements.

4


Richmond Mutual Bancorporation, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
20242023
Operating Activities
Net income$2,368,916 $2,904,046 
Items not requiring (providing) cash
Provision for credit losses183,134 170,106 
Depreciation and amortization214,846 261,665 
Deferred income tax36,457 (88,482)
Stock based compensation367,484 379,408 
Investment securities amortization, net265,798 296,954 
Net gains on loan and lease sales(119,317)(155,563)
Gain on sale of real estate owned(1,558)(1,921)
Gain on sale of premises and equipment (1,800)
Accretion of loan origination fees(160,947)(283,473)
Amortization of mortgage-servicing rights43,135 39,558 
ESOP shares expense154,168 170,511 
Increase in cash surrender value of life insurance(22,363)(21,994)
Loans originated for sale(6,697,600)(6,067,122)
Proceeds on loans sold5,989,100 5,593,422 
Net change in
Interest receivable(144,631)27,242 
Other assets1,185,192 757,505 
Other liabilities(966,798)(1,569,371)
Interest payable(532,782)1,177,300 
Net cash provided by operating activities2,162,234 3,587,991 
Investing Activities
Purchases of securities available for sale(1,935,953)(7,097,933)
Proceeds from maturities and paydowns of securities available for sale4,404,697 7,766,832 
Proceeds from maturities and paydowns of securities held to maturity290,306 918,473 
Net change in loans(31,650,763)(29,281,218)
Proceeds from sales of real estate owned48,821 59,386 
Purchases of premises and equipment(115,447)(86,375)
Proceeds from sale of premises and equipment 1,800 
Purchase of FHLB stock (1,260,000)(134,900)
Net cash used in investing activities(30,218,339)(27,853,935)
Financing Activities
Net change in
Demand and savings deposits(5,097,505)(23,878,107)
Certificates of deposit33,600,066 48,651,800 
Advances by borrowers for taxes and insurance113,420 130,648 
Proceeds from FHLB advances58,000,000 179,500,000 
Repayment of FHLB advances(56,000,000)(176,000,000)
Repurchase of common stock(1,072,488)(1,150,933)
Dividends paid(1,437,299)(1,519,855)
Net cash provided by financing activities28,106,194 25,733,553 
Net Change in Cash and Cash Equivalents50,089 1,467,609 
Cash and Cash Equivalents, Beginning of Period20,240,125 15,922,093 
Cash and Cash Equivalents, End of Period$20,290,214 $17,389,702 
Additional Cash Flows and Supplementary Information
Interest paid$10,210,194 $4,144,688 
Transfers from loans to other real estate owned 366,508 
See Notes to Condensed Consolidated Statements.

5


Richmond Mutual Bancorporation, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Amounts)
Note 1: Basis of Presentation
The accompanying financial information is unaudited and has been prepared from the consolidated financial statements of Richmond Mutual Bancorporation, Inc., and its wholly owned direct and indirect subsidiaries, First Bank Richmond, First Insurance Management, Inc., FB Richmond Holdings, Inc. and FB Richmond Properties, Inc. References in this document to Richmond Mutual Bancorporation refer to Richmond Mutual Bancorporation, Inc. References to “we,” “us,” and “our” or the “Company” refers to Richmond Mutual Bancorporation and its wholly-owned direct and indirect subsidiaries, First Bank Richmond, First Insurance Management, Inc., FB Richmond Holdings, Inc., and FB Richmond Properties, Inc. unless the context otherwise requires.
First Bank Richmond is an Indiana state-chartered commercial bank headquartered in Richmond, Indiana and the wholly owned banking subsidiary of Richmond Mutual Bancorporation. First Bank Richmond provides full banking services through its seven full- and one limited-service offices located in Cambridge City (1), Centerville (1), Richmond (5) and Shelbyville (1), Indiana, its five full-service offices located in Piqua (2), Sidney (2) and Troy (1), Ohio, and its loan production office in Columbus, Ohio. Administrative, trust and wealth management services are conducted through First Bank Richmond's Corporate Office/Financial Center located in Richmond, Indiana. As an Indiana-chartered commercial bank, First Bank Richmond is subject to regulation by the Indiana Department of Financial Institutions ("IDFI") and the Federal Deposit Insurance Corporation ("FDIC").
First Insurance Management, Inc., a wholly-owned subsidiary of the Company which was formed and began operations in June 2022, is a Nevada-based captive insurance company that insures against certain risks unique to the operations of the Company and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. First Insurance Management, Inc. is subject to the regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance.
FB Richmond Holdings, Inc., a wholly-owned subsidiary of First Bank Richmond which was formed and began operations in April 2020, is a Nevada corporation that holds and manages substantially all of First Bank Richmond's investment portfolio. FB Richmond Holdings, Inc. has one active subsidiary, FB Richmond Properties, Inc., a Delaware corporation which holds loans on behalf of the Bank.
The accompanying unaudited condensed consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include information or note disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K") filed with the Securities and Exchange Commission (“SEC”) on March 29, 2024 (SEC File No. 001-38956). However, in the opinion of management, all adjustments which are necessary for a fair presentation of the consolidated financial statements have been included. Those adjustments consist only of normal recurring adjustments. The results of operations for the period are not necessarily indicative of the results to be expected for the full year.
Use of Estimates in Preparation of Financial Statements
Financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
Loans
For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection.  Past due status is based on contractual terms of the loan.  For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the

6


contractual due date.  For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.
The Company charges off residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss.  The Company adheres to timeframes established by applicable regulatory guidance, which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value, less costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 90 days past due, and charge down to the net realizable value when other secured loans are 90 days past due.  Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.
For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income.  The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual.  Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal.  The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.
On occasion, the Company will provide modifications to loans and leases to borrowers experiencing financial difficulty, by providing payment delays, term extensions, or interest-rate reductions. In some cases, combinations of modifications may be made to the same loan or lease. If determined that the value of the modified loan or lease is less than the recorded investment in the loan, a charge-off is recognized to the allowance for credit losses on loans and leases.
Note 2: Accounting Pronouncements
The Jumpstart Our Business Startups Act (the "JOBS Act"), which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as and has elected to be an emerging growth company under the JOBS Act. An emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. The Company has elected to comply with new or amended accounting pronouncements in the same manner as a private company.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU applies to contracts, hedging relationships and other transactions that reference the London Interbank Offer Rate ("LIBOR") or other rate references expected to be discontinued because of reference rate reform. The ASU permits an entity to make necessary modifications to eligible contracts or transactions without requiring contract remeasurement or reassessment of a previous accounting determination. In December of 2022, the FASB issued ASU No. 2022-06 which extended the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The guidance ensures the relief in Topic 848 covers the period of time during which a significant number of modifications may take place and the ASU defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The Company does not expect the adoption of ASU No. 2020-04 to have a material impact on its consolidated financial statements.

In March 2023, the FASB issued ASU No. 2023-02, Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. ASU No. 2023-02 is effective for all public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The Company adopted this guidance on January 1, 2024. Adoption of ASU 2023-02 did not have a material impact on the Company's consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU established new income tax disclosure requirements and modified existing requirements. The ASU requires additional information be disclosed for specified categories, and reconciling items that meet a certain threshold, within the rate reconciliation on an annual basis. Additionally, this ASU requires information be disclosed on the amount of income taxes paid (net of refunds), disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds) disaggregated by jurisdiction based on a quantitative threshold. ASU No. 2023-09 is effective for all public business entities for

7


annual periods beginning after December 15, 2024. The ASU is effective for the Company beginning January 1, 2025. The Company does not expect the adoption of ASU No. 2023-09 to have a material impact on its consolidated financial statements.


Note 3: Investment Securities
The amortized cost and approximate fair values, together with gross unrealized gains and losses, of investment securities are as follows:
March 31, 2024
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Available for sale
U.S. treasury securities$4,944 $ $28 $4,916 
SBA Pools5,007  577 4,430 
Federal agencies15,000  1,977 13,023 
State and municipal obligations167,705 2 30,236 137,471 
Mortgage-backed securities - government-sponsored enterprises (GSE) residential130,285 24 22,666 107,643 
Corporate obligations11,500  2,636 8,864 
334,441 26 58,120 276,347 
Held to maturity
State and municipal obligations4,658 12 78 4,592 
4,658 12 78 4,592 
Total investment securities$339,099 $38 $58,198 $280,939 

December 31, 2023
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Available for sale
U.S. treasury securities$2,996 $ $20 $2,976 
SBA Pools5,337  565 4,772 
Federal agencies15,000  1,847 13,153 
State and municipal obligations169,118 16 27,688 141,446 
Mortgage-backed securities - government-sponsored enterprises (GSE) residential133,223 62 21,804 111,481 
Corporate obligations11,500  2,640 8,860 
337,174 78 54,564 282,688 
Held to maturity
State and municipal obligations4,950 13 42 4,921 
4,950 13 42 4,921 
Total investment securities$342,124 $91 $54,606 $287,609 

8


The amortized cost and fair value of investment securities at March 31, 2024, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Available for SaleHeld to Maturity
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Within one year$6,493 $6,443 $1,500 $1,483 
One to five years25,952 23,894 1,675 1,641 
Five to ten years36,807 32,651 773 785 
After ten years134,904 105,716 710 683 
204,156 168,704 4,658 4,592 
Mortgage-backed securities –GSE residential130,285 107,643   
Totals$334,441 $276,347 $4,658 $4,592 
Investment securities with a carrying value of $157,728,000 and $162,430,000 were pledged at March 31, 2024 and December 31, 2023, respectively, to secure certain deposits and for other purposes as permitted or required by law.
There were no sales of securities available for sale for the three months ended March 31, 2024 and 2023.
Certain investments in debt securities, as reflected in the table below, are reported in the condensed consolidated financial statements and notes at an amount less than their historical cost.  Total fair value of these investments at March 31, 2024 and December 31, 2023 was $278,077,000 and $279,852,000, respectively, which is approximately 99% and 97% of the Company’s aggregated available for sale and held to maturity investment portfolio at those dates, respectively.  These declines primarily resulted from changes in market interest rates since their purchase.
The Company does not consider available for sale securities with unrealized losses to be experiencing credit losses at March 31, 2024. Management considers it more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities.
Held to maturity securities are financial assets measured at amortized cost. Held to maturity securities are required to have an established allowance for credit losses that represents the portion of the amortized cost basis of a financial asset that is not expected to be collectable. The Company estimates expected credit losses on a collective basis by security type, with consideration given to historical information, credit ratings, and the statistical probability of future losses.
The Company monitors the credit quality of investment securities held to maturity through the use of credit ratings quarterly. As of March 31, 2024, there was no allowance for credit losses recognized on the Company's securities held to maturity portfolio.
The following table summarizes the amortized cost of held to maturity securities by credit quality indicator as of March 31, 2024:
State and municipal obligations
AA+$1,151 
AA-585 
A+710 
BBB+40 
Not rated2,172 
$4,658 
The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses.

9


The following tables show the Company’s investment securities by gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2024 and December 31, 2023:
Description of
Securities
March 31, 2024
Less Than 12 Months12 Months or MoreTotal
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Available for sale
U.S. Treasury Securities$2,429 $13 $2,487 $15 $4,916 $28 
SBA Pools289  4,008 577 4,297 577 
Federal agencies  13,023 1,977 13,023 1,977 
State and municipal obligations3,295 17 133,931 30,219 137,226 30,236 
Mortgage-backed securities - GSE residential1,817 13 104,377 22,653 106,194 22,666 
Corporate obligations  8,864 2,636 8,864 2,636 
Total available for sale7,830 43 266,690 58,077 274,520 58,120 
Held to maturity
State and municipal obligations858 8 2,699 70 3,557 78 
Total$8,688 $51 $269,389 $58,147 $278,077 $58,198 

Description of
Securities
December 31, 2023
Less Than 12 Months12 Months or MoreTotal
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Available for sale
U.S. Treasury securities$489 $4 $2,487 $16 $2,976 $20 
SBA Pools329  4,410 565 4,739 565 
Federal agencies  13,153 1,847 13,153 1,847 
State and municipal obligations1,565 21 137,119 27,667 138,684 27,688 
Mortgage-backed securities - GSE residential3,458 139 104,581 21,665 108,039 21,804 
Corporate obligations  8,860 2,640 8,860 2,640 
Total available for sale5,841 164 270,610 54,400 276,451 54,564 
Held to maturity
State and municipal obligations849 3 2,552 39 3,401 42 
Total$6,690 $167 $273,162 $54,439 $279,852 $54,606 
Federal Agency Obligations.  The unrealized losses on the Company’s investments in direct obligations of U.S. federal agencies were caused by interest rate changes.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments.  The Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.
SBA Pools and Mortgage-Backed Securities - GSE Residential.  The unrealized losses on the Company’s investment in mortgage-backed securities and SBA pools were caused by interest rate changes and illiquidity.  The Company expects to recover the amortized cost basis over the term of the securities. The decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell the securities and it is not more likely than not the Company will be required to sell the securities before recovery of their amortized cost basis, which may be maturity.
State, Municipal, and Corporate Obligations.  The unrealized losses on the Company’s investments in securities of state, municipal, and corporate obligations were caused by interest rate changes.  The contractual terms of those securities do not

10


permit the issuer to settle the securities at a price less than the amortized cost basis of the investments.  The Company does not intend to sell the securities and it is not more likely than not the Company will be required to sell the securities before recovery of their amortized cost basis, which may be maturity.
The Company expects the fair value of the securities as described above to recover as the securities approach their maturity or reset date.
Note 4: Loans, Leases and Allowance
The following table shows the composition of the loan and lease portfolio at March 31, 2024 and December 31, 2023:
March 31,
2024
December 31,
2023
Commercial mortgage$338,434 $341,633 
Commercial and industrial123,661 115,428 
Construction and development165,063 157,805 
Multi-family153,719 138,757 
Residential mortgage171,050 162,123 
Home equity lines of credit12,146 10,904 
Direct financing leases152,468 156,598 
Consumer23,004 23,264 
1,139,545 1,106,512 
Less
Allowance for credit losses on loans and leases15,825 15,663 
Deferred loan fees526 776 
$1,123,194 $1,090,073 

The Company rates all loans and leases by credit quality using the following designations:
Grade 1 – Exceptional
Exceptional loans and leases are top-quality loans to individuals whose financial credentials are well known to the Company. These loans and leases have excellent sources of repayment, are well documented and/or virtually free of risk (i.e., CD secured loans).
Grade 2 – Quality Loans and Leases
These loans and leases have excellent sources of repayment with no identifiable risk of collection, and they conform in all respects to Company policy and IDFI and FDIC regulations.  Documentation exceptions are minimal or are in the process of being corrected and are not of a type that could subsequently expose the Company to risk of loss.
Grade 3 – Acceptable Loans
This category is for “average” quality loans and leases.  These loans and leases have adequate sources of repayment with little identifiable risk of collection and they conform to Company policy and IDFI/FDIC regulations.
Grade 4 – Acceptable but Monitored
Loans and leases in this category may have a greater than average risk due to financial weakness or uncertainty but do not appear to require classification as special mention or substandard loans.  Loans and leases rated “4” need to be monitored on a regular basis to ascertain that the reasons for placing them in this category do not advance or worsen.
Grade 5 – Special Mention

11


Loans and leases in this category have potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or in the Company’s credit position at some future date.  Special Mention loans and leases are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.  This special mention rating is designed to identify a specific level of risk and concern about an asset’s quality.  Although a special mention loan or lease has a higher probability of default than a pass rated loan or lease, its default is not imminent.
Grade 6 – Substandard
Loans and leases in this category are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans and leases so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Substandard loans and leases have a high probability of payment default, or they have other well-defined weaknesses.  Such loans and leases have a distinct potential for loss; however, an individual loan’s or lease’s potential for loss does not have to be distinct for the loan or lease to be rated substandard.
The following are examples of situations that might cause a loan or lease to be graded a “6”:
Cash flow deficiencies (losses) jeopardize future loan or lease payments.
Sale of non-collateral assets has become a primary source of loan or lease repayment.
The relationship has deteriorated to the point that sale of collateral is now the Company’s primary source of repayment, unless this was the original source of loan or lease repayment.
The borrower is bankrupt or for any other reason future repayment is dependent on court action.
Grade 7 – Doubtful
A loan or lease classified as doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable.  A doubtful loan or lease has a high probability of total or substantial loss.  Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Because of high probability of loss, nonaccrual accounting treatment will be required for doubtful loans and leases.
Grade 8 – Loss
Loans and leases classified loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan or lease even though partial recovery may be effected in the future.
No material changes have been made to the risk characteristics discussed above contained in the Company's 2023 Form 10-K.

12


The following tables present the credit risk profile of the Company’s loan and lease portfolio based on rating category, payment activity, and origination year as of March 31, 2024 and rating category as of December 31, 2023:
20242023202220212020PriorRevolving loans amortized cost basisTotal
As of March 31, 2024:
Commercial mortgage
Pass$4,094 $32,554 $83,880 $68,696 $32,560 $95,083 $15,987 $332,854 
Special Mention    4,814   4,814 
Substandard   246  520  766 
Total Commercial mortgage4,094 32,554 83,880 68,942 37,374 95,603 15,987 338,434 
Current period gross charge-offs        
Commercial and industrial
Pass10,338 35,863 12,420 12,790 4,085 11,815 31,613 118,924 
Substandard  355   112 4,270 4,737 
Total Commercial and industrial10,338 35,863 12,775 12,790 4,085 11,927 35,883 123,661 
Current period gross charge-offs        
Construction and development
Pass13,993 29,118 78,358 35,146 3,045 503  160,163 
Substandard     4,900  4,900 
Total Construction and development13,993 29,118 78,358 35,146 3,045 5,403  165,063 
Current period gross charge-offs        
Multi-family
Pass205 3,733 50,088 35,305 6,336 25,479 26,846 147,992 
Special Mention   1,538   4,189 5,727 
Total Multi-family205 3,733 50,088 36,843 6,336 25,479 31,035 153,719 
Current period gross charge-offs        
Residential mortgage
Pass6,162 34,488 31,043 34,687 17,396 43,664 2,207 169,647 
Substandard   226  1,177  1,403 
Total Residential mortgage6,162 34,488 31,043 34,913 17,396 44,841 2,207 171,050 
Current period gross charge-offs     10  10 
Home equity
Pass22      12,124 12,146 
Total Home equity lines of credit22      12,124 12,146 
Current period gross charge-offs        
Direct financing leases
Pass13,286 70,193 37,682 20,429 8,169 2,115  151,874 
Substandard12 261 206 42 36   557 
Doubtful 36    1  37 
Total Direct financing leases13,298 70,490 37,888 20,471 8,205 2,116  152,468 
Current period gross charge-offs 157 125 70 5   357 
Consumer
Pass2,396 8,639 7,378 3,328 681 522  22,944 
Substandard 22 37   1  60 
Total Consumer2,396 8,661 7,415 3,328 681 523  23,004 
Current period gross charge-offs9 36 17 10    72 
Total Loans and Leases$50,508 $214,907 $301,447 $212,433 $77,122 $185,892 $97,236 $1,139,545 
Total current period gross charge-offs$9 $193 $142 $80 $5 $10 $ $439 



13



20232022202120202019PriorRevolving loans amortized cost basisTotal
As of December 31, 2023:
Commercial mortgage
Pass$31,795 $83,567 $69,863 $33,226 $