Richmond Mutual’s net interest income doubles, but loan losses hit profit (NASDAQ: RMBI)

What happened

Richmond Mutual Bancorporation, Inc. (NASDAQ: RMBI) earned $1.7 million in the third quarter, down from $3.6 million a year earlier.

In its Oct. 30 earnings release, the company said net interest income more than doubled to $22.8 million, up 102.3%, after the Farmers Bancorp merger closed July 1. A larger credit-loss provision and higher noninterest expense more than absorbed that gain.

Diluted earnings per share were $0.11, against $0.36 a year earlier and $0.22 in the second quarter, when net income was $2.2 million. The merger issued 6,254,286 new shares. Diluted average shares were 16.22 million versus 9.89 million a year earlier, so per-share earnings fell faster than net income.

Key numbers

Metric	Latest	Change	Source
Net income, Q3 2026	$1.7 million	from $3.6 million	SEC 8-K Exhibit 99.1
Net interest income, Q3 2026	$22.8 million	from $11.3 million, +102.3%	SEC 8-K Exhibit 99.1
Diluted earnings per share, Q3 2026	$0.11	from $0.36	SEC 8-K Exhibit 99.1
Provision for credit losses, Q3 2026	$6.1 million	from $269,000	SEC 8-K Exhibit 99.1
Annualized net interest margin, Q3 2026	3.68%	from 3.07%, +0.61 percentage points	Calculated from SEC 8-K Exhibit 99.1
Bank Tier 1 leverage ratio, Sept. 30, 2026	9.99%		SEC 8-K Exhibit 99.1

Read more: Richmond Mutual Bancorporation (RMBI) company research

Where the net interest income came from

Most of the growth came from acquired balances. Average interest-earning assets rose $1.02 billion from a year earlier, mainly because of the merger. The average loan balance rose $831.9 million. Since Dec. 31, loans grew by $803.6 million through acquisition and only $23.6 million organically.

The net interest margin was 3.68%, up from 3.22% in the second quarter and 3.07% a year earlier. The company points to higher yields on the acquired loans, lower average funding costs and more noninterest-bearing deposits. Fair-value accretion and amortization from the deal also affected net interest income.

Deposits reached $2.09 billion at Sept. 30, up from $1.15 billion at June 30. The merger brought in $935.8 million. Noninterest-bearing deposits were $351.4 million, or 16.9% of the total, against 8.7% at June 30. Acquired public fund accounts pay higher rates, which lifted the average rate on interest-bearing checking to 2.19% from 1.17% a year earlier.

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Credit costs and one-time items

Credit costs were the main drag on earnings. The provision for credit losses was $6.1 million, against $823,000 in the second quarter and $269,000 a year earlier. Net charge-offs matched that level. They included a $4.5 million partial charge-off on a nonaccruing commercial real estate loan that moved to other real estate owned, and $803,000 on a commercial and industrial loan.

Non-performing loans and leases rose to $32.2 million, or 1.59% of loans, from $21.8 million, or 1.78%, at June 30. Of the increase since Dec. 31, $8.9 million came from legacy loans, mainly commercial and industrial credits tied to one customer relationship. Another $4.8 million were non-performing when acquired. The allowance covered 78.9% of non-performing loans, compared with 94.6% at Dec. 31.

Merger items cut both ways. Noninterest expense was $20.0 million versus $8.1 million a year earlier. That included $3.0 million of nonrecurring merger costs, mainly software and core conversion, plus $1.8 million of core deposit intangible amortization. Noninterest income of $4.6 million included a preliminary bargain purchase gain of $1.6 million.

Pre-tax income was $1.27 million. An income tax benefit of $482,000 lifted net income above it. The filing links the benefit to the gain's tax effects, higher tax credits and tax-exempt interest.

Why it matters

OptimistFi has argued that Richmond Mutual works only if growth in net interest income and durable capital outpace what the share price already assumes. The quarter delivers a far larger deposit base, but the growth came from acquired balances rather than organic lending.

Capital supports the second half of that view. Equity rose to $228.9 million from $148.3 million at June 30. The bank's Tier 1 leverage ratio was 9.99%, above the 8.0% requirement under the Community Bank Leverage Ratio framework it began using Sept. 30. Book value per share slipped to $13.66 from $14.11 at June 30.

The caveat is earnings quality. A one-time gain and a tax benefit helped the result. Rising non-performing loans and merger expenses weighed on profit. The quarter shows scale more than steady earnings power, and OptimistFi's view is mixed.

What's next

The next quarterly report will show whether net interest income holds near this level without another large provision or merger expense.

The company is marketing two repossessed properties. One is a former behavioral health hospital campus in Dayton, Ohio, carried at $2.2 million. The other is a restaurant property in Richmond, Indiana, carried at $450,000. Sale prices against those carrying values are a concrete credit test.

Chairman and CEO Garry Kleer said the focus is integrating the two organizations. The filing lists the planned systems conversion among the integration risks.

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