RICHMOND, Ind., Jan. 31, 2020 /PRNewswire/ -- Richmond
Mutual Bancorporation, Inc. (the "Company") (NASDAQ: RMBI), parent
company of First Bank Richmond (the "Bank"), today announced a net
loss of $12.5 million for the fourth
quarter of 2019 compared to net income of $1.5 million for the fourth quarter of
2018. The net loss for the fourth quarter of 2019 reflects an
estimated after tax charge of $14.3
million ($1.15 per share) to
terminate the Company's participation in a multiemployer defined
benefit pension plan (the "DB Plan"), which resulted in a
$19.3 million reduction in revenue
and pre-tax earnings in the quarter. The net loss for the
year ended December 31, 2019 was
$14.1 million compared to net income
of $5.7 million in 2018. Net
income for the year ended December 31,
2019 was affected by the estimated after tax charge
associated with the termination of the DB Plan mentioned above, an
after tax charge of $4.9 million
associated with the Company's contribution to the First Bank
Richmond, Inc. Community Foundation (the "Foundation") which was
formed in connection with our reorganization and stock offering
completed on July 1, 2019, and an
after tax charge of $1.3 million
related to the adoption of a nonqualified deferred compensation
plan in the second quarter of 2019.
Net income for the fourth quarter of 2019, excluding the
one-time expenses associated with the DB Plan, was $1.8 million, or $0.14 per diluted share, a 19.0% increase over
net income for fourth quarter of 2018. Net income for the
full year 2019, excluding the one-time charges associated with the
DB Plan, the contribution to the Foundation, and the nonqualified
deferred compensation plan, was $6.4
million, a 12.3% increase over net income for 2018.
Management believes it is appropriate to eliminate these one-time
charges as they are not reflective of the Company's ongoing
operations and that the presentation of these adjusted financial
measures are more meaningful to investors in evaluating the
financial results of the Company. See the section entitled
"Use of Non-GAAP Financial Measures" at the end of this release for
a reconciliation of net income.
Effective July 1, 2019, the
Company completed its initial public offering in connection with
the reorganization from a mutual to a stock holding company form of
organization. The Company sold 13,026,625 shares of common
stock at $10.00 per share, for gross
offering proceeds of approximately $130.3
million and contributed 500,000 shares and $1.25 million cash to the Foundation.
President's Comments
Garry
Kleer, Chairman, President and Chief Executive Officer of
the Company stated: "2019 was an interesting and exciting year for
our company. We have gone through many changes in the 132
year history of our company but becoming a public company was by
far the most challenging. The restructuring that took place
last year has allowed us to lay a solid foundation for 2020 and
beyond. Our reorganization to a public company, our
successful initial public offering and the initiation of the
restructuring of our employee benefits were major factors in 2019
and we are excited to begin 2020 without a host of non-recurring
items impacting the results of our operations. Without those
one-time charges, we would have had a good year based on normal
operations. We plan to continue to leverage our capital
allowing for sustained growth in order to create value for our
shareholders."
Mr. Kleer further stated: "The actual expense related to the
termination of our defined benefit pension plan won't be known
until the plan obligations are purchased by an insurance company or
other buyer. The expense could be higher or lower than the
amount accrued in the fourth quarter of 2019 depending on a number
of factors, including but not limited to the interest rate
environment and the valuation of plan assets by the purchaser as of
the date of termination. The charges for the Foundation and
the accrual of the expenses associated with the restructuring of
our employee benefits were planned for and detailed in our
prospectus. With those charges and the ongoing expense
associated with them and the cost of the reorganization behind us,
we look for 2020 to be a solid year."
Balance Sheet Summary
Total assets increased
$136.4 million, or 16.1%, to
$986.0 million at December 31, 2019 from $849.6 million at December
31, 2018, driven by a $32.5
million, or 5.0%, increase in the loan and lease portfolio,
net of allowance for loan and lease losses, a $74.1 million, or 51.6%, increase in investment
securities and a $25.6 million, or
171.1%, increase in cash and cash equivalents. The increase in
assets was funded with the proceeds received by the Company in
connection with the initial public offering. Most of the
growth in the loan portfolio occurred in the commercial and
multi-family real estate portfolio.
The allowance for loan and lease losses increased $1.5 million, or 26.8%, to $7.1 million at December
31, 2019 from $5.6 million at
December 31, 2018, primarily as a
result of growth in commercial and multifamily real estate loans.
At December 31, 2019, the allowance
for loan and lease losses totaled 1.02% of total loans and leases
outstanding compared to 0.85% at December
31, 2018. Net charge-offs during 2019 were
$1.1 million or 0.16% of average
loans and leases outstanding compared to $879,000 or 0.14% of average loans and leases
outstanding during 2018.
Total deposits decreased $3.4
million, or 0.6%, to $617.2
million at December 31, 2019
from $620.6 million at December 31, 2018. This decrease in deposits was
due to brokered deposits decreasing $67.8
million during 2019. At December 31,
2019, brokered deposits totaled $56.7
million, or 9.2% of total deposits, compared to $124.5 million, or 15.0% of total deposits at
December 31, 2018. This decrease was
partially offset by an increase in retail certificates of deposit
of $40.8 million from December 31, 2018 to December 31, 2019.
Stockholders' equity totaled $187.8
million at December 31, 2019,
an increase of $101.9 million from
December 31, 2018. The increase in
stockholders' equity was the result of the completion of the
Company's initial public offering and a $3.7
million reduction in accumulated other comprehensive loss,
partially offset by a net loss of $14.1
million. First Bank Richmond's tangible common equity
ratio and its risk-based capital ratios exceeded all
"well-capitalized" levels as defined by regulatory standards as of
December 31, 2019.
Income Statement Summary
Net interest income before
the provision for loan and lease losses increased $745,000, or 10.4%, to $7.9 million in the fourth quarter of 2019
compared to $7.1 million in the
fourth quarter of 2018. Net interest income before provision
for loan and lease losses increased $3.0
million, or 10.8%, to $30.4
million in 2019 compared to $27.4
million in 2018. These increases primarily were due to
increases in average interest-earning assets during the three and
twelve months ended December 31, 2019
compared to the comparable periods in 2018.
Net interest margin was 3.33% (annualized) for the fourth
quarter of 2019 compared to 3.56% (annualized) for the fourth
quarter of 2018 and was 3.34% for the year ended December 31, 2019 compared to 3.57% during
2018. The decrease in net interest margin mostly reflects
lower yields on average interest-earning assets largely as a result
of three 25 basis point decreases in the targeted Fed Funds Rate in
the third and fourth quarters of 2019. The average yield on
interest-earning assets for the quarter and year ended December 31, 2019 was 4.48% and 4.57%,
respectively, compared to 4.71% and 4.58% for the comparable
periods in 2018, respectively.
The provision for loan and lease losses for the three months
ended December 31, 2019 totaled
$885,000, a $555,000 or 168.2% increase over the $330,000 recorded in the three months ended
December 31, 2018. The
provision for loan and lease losses for the year ended December 31, 2019 totaled $2.6 million compared to $1.7 million for 2018, a $920,000 or 54.8% increase. The higher provisions
were due to the overall increase in the size of the loan portfolio,
primarily commercial and multifamily real estate loans, as well as
a reflection of the overall slowing economy. Net charge-offs during
the fourth quarter of 2019 were $692,000, compared to net charge-offs of
$358,000 in the fourth quarter of
2018. Net charge-offs during 2019 were $1.1 million, compared to net charge-offs of
$879,000 in 2018.
Total noninterest income decreased $639,000, or 41.3%, to $908,000 for the three months ended December 31, 2019, compared to $1.5 million for the same period in 2018.
Loan servicing fees decreased $246,000 primarily as the result of the
recognition of impairment of mortgage servicing rights of
$202,000 in the fourth quarter of
2019 due to falling interest rates. Gain on sale of loans and
leases increased $101,000, or 97.5%,
to $204,000 for the three months
ended December 31, 2019 compared to
$104,000 for the three months ended
December 31, 2018 as a result of
stronger mortgage banking activity during the fourth quarter of
2019. Other loan fees decreased $137,000 during the fourth quarter of 2019
compared to the fourth quarter of 2018 due to lower loan processing
fees received during the quarter. Other income decreased
$375,000 to $229,000 for the three months ended December 31, 2019 compared to $604,000 for the three months ended December 31, 2018. This decrease primarily
was due to gains recorded on prepayment of below market rate FHLB
advances recorded in 2018.
Total noninterest income decreased $434,000, or 10.1%, to $3.9 million for 2019 compared to $4.3 million for 2018. The decrease in total
noninterest income was primarily driven by the recognition of
impairment of mortgage servicing rights of $202,000 and a $283,000 decrease in other income for the reasons
discussed above. These decreases were partially offset by an
$83,000 increase in the gain on sale
of securities in 2019 compared to 2018.
Total noninterest expense increased $18.5
million, or 280.3%, to $25.1
million during the three months ended December 31, 2019, compared to the same period in
2018. Of the $18.5 million
increase, $19.3 million was
attributable to the estimated expense associated with terminating
the DB Plan, which is higher than the $13.3
million ($9.8 million after
tax) estimated expense we had previously disclosed. The
increase in the estimated DB Plan expense was due to a 75 basis
point decrease in the targeted Fed Funds Rate during the second
half of 2019. Excluding the estimated DB Plan expense,
noninterest expense decreased $804,000 during fourth quarter of 2019 compared
to the same period in 2018.
Salaries and employee benefits increased $18.9 million, or 540.0%, in the fourth quarter
of 2019 compared to the same period in 2018 as a result of the
estimated DB Plan expense recorded in the fourth quarter of 2019.
Excluding the estimated DB Plan expense, salaries and employee
benefits decreased $421,000, or
11.9%, during the fourth quarter of 2019 compared to the fourth
quarter of 2018. Data processing fees increased $77,000, or 19.8%, during the three months ended
December 31, 2019 compared to
December 31, 2018, primarily
attributable to higher transaction volume and additional services
utilized from the Company's IT provider. In addition,
advertising expenses increased $144,000, or 77.8%, for the three months ended
December 31, 2019 compared to the
three months ended December 31,
2018. Partially offsetting the increases in noninterest
expense was a $212,000, or 127.7%,
decrease in Federal Deposit Insurance Corporation ("FDIC")
assessments in the fourth quarter of 2019 compared to the fourth
quarter of 2018 as the Bank paid a reduced deposit insurance
assessment. This was the result of the Deposit Insurance Fund
achieving a specified ratio of eligible deposits and banks with
less than $10 billion in assets
receiving credit for previous assessments paid. The Bank also
had $36,000 in small bank credits on
future assessments remaining as of September
30, 2019, which was recognized in the fourth quarter of
2019. Legal and professional fees decreased $255,000, or 57.2%, in the fourth quarter of 2019
compared to the same period in 2018 due to legal expenses incurred
in connection with work on our reorganization and stock offering
during the fourth quarter of 2018. In addition, loan tax and
insurance expense decreased $301,000,
or 73.6%, and other expense increased $160,000, or 20.0%, in the fourth quarter of 2019
compared to the fourth quarter of 2018. The decrease in loan
tax and insurance expense primarily was due to lower expenses in
2019 associated with loans sold but still serviced by the Bank, and
the increase in other expense was primarily due to franchise taxes
paid due to the Bank's leasing program and expenses associated with
the Bank's debit card program.
Total noninterest expense increased $27.9
million, or 120.8%, to $51.0
million during 2019 compared to 2018. The increase
primarily was the result of the $19.3
million estimated DB Plan expense, the $6.25 million expense attributable to the
contribution to the Foundation and the $1.7
million expense related to the adoption of a nonqualified
deferred compensation plan during the year. Excluding
these three non-recurring expenses, noninterest expense increased
$700,000 in 2019 compared to
2018.
Salaries and employee benefits increased $21.2 million, or 153.6%, in 2019 compared to
2018, primarily due to the estimated DB Plan expense and expense
related to the adoption of the nonqualified deferred compensation
plan. Excluding the cost of those two non-recurring expenses,
salaries and employee benefits increased $300,000, or 2.2%, due to merit increases. Data
processing fees increased $267,000,
while FDIC assessments decreased $329,000, or 54.8%, during 2019 compared to 2018,
both for the reasons set forth above. Legal and professional
fees increased $133,000, or 15.2%, in
2019 compared to 2018, primarily as a result of our reorganization
and stock offering and operating as a public company.
Advertising expense increased $280,000, or 51.5%, year-over-year due to
sponsorships of various community organizations and events.
Loan tax and insurance expense decreased by $274,000, or 46.7%, during 2019 compared to 2018
due to a recovery of $84,000 in
property taxes during 2019 that were advanced in 2018 and lower
expenses in 2019 on loans sold but still serviced by the
Bank. Other expenses increased $259,000, or 9.0%, in 2019 compared to 2018,
primarily driven by a $62,000
increase in loan closing expenses and a $46,000 increase in charitable contributions.
Income tax expense decreased $4.9
million in the fourth quarter of 2019 compared to the fourth
quarter of 2018. Income tax expense decreased by $6.6 million in 2019 compared to 2018 and was a
benefit of $5.3 million for 2019.
These decreases in income tax expense were due to pre-tax income
decreasing during the 2019 periods compared to the same periods in
2018 for the reasons discussed above.
About Richmond Mutual Bancorporation, Inc.
Richmond
Mutual Bancorporation, Inc., headquartered in Richmond, Indiana, is the holding company for
First Bank Richmond, a community-oriented financial institution
offering traditional financial and trust services within its local
communities through its eight locations in Richmond, Centerville, Cambridge City and Shelbyville, Indiana, its five locations in
Sidney, Piqua and Troy,
Ohio and its loan production office in Columbus, Ohio.
FORWARD-LOOKING STATEMENTS:
This document and other filings by the Company with the
Securities and Exchange Commission (the "SEC"), as
well as press releases or other public or stockholder
communications released by the Company, may contain forward-looking
statements, including, but not limited to, (i) statements
regarding the financial condition, results of operations and
business of the Company, (ii) statements about the Company's
plans, objectives, expectations and intentions and other statements
that are not historical facts and (iii) other statements
identified by the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate,"
"project," "intends" or similar expressions that are intended to
identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on current beliefs and
expectations of the Company's management and are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company's control. In
addition, these forward-looking statements are subject to
assumptions with respect to future business strategies and
decisions that are subject to change.
The following factors, among others, could cause actual
results to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements: changes
in economic conditions; legislative changes; changes in policies by
regulatory agencies; fluctuations in interest rates; the risks of
lending and investing activities, including changes in the level
and direction of loan delinquencies and write-offs and changes in
estimates of the adequacy of the allowance for loan losses; the
Company's ability to access cost-effective funding; fluctuations in
real estate values and both residential and commercial real estate
market conditions; demand for loans and deposits in the Company's
market area; changes in management's business strategies; changes
in the regulatory and tax environments in which the Company
operates; and other factors set forth in the Company's filings with
the SEC.
The factors listed above could materially affect the
Company's financial performance and could cause the Company's
actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in
any current statements.
The Company does not undertake - and specifically declines
any obligation - to publicly release the result of any revisions
which may be made to any forward-looking statements to reflect
events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events. When
considering forward-looking statements, keep in mind these risks
and uncertainties. Undue reliance should not be placed on any
forward-looking statement, which speaks only as of the date made.
Refer to the Company's periodic and current reports filed with the
SEC for specific risks that could cause actual results to be
significantly different from those expressed or implied by any
forward-looking statements.
Financial
Highlights (unaudited)
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
SELECTED
OPERATIONS DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
$
10,595,412
|
|
$
9,469,713
|
|
$
41,557,900
|
|
$
35,199,250
|
Interest
expense
|
2,705,534
|
|
2,324,252
|
|
11,156,478
|
|
7,752,319
|
Net interest
income
|
7,889,878
|
|
7,145,461
|
|
30,401,422
|
|
27,446,931
|
Provision for loan
and lease losses
|
885,000
|
|
330,000
|
|
2,600,000
|
|
1,680,000
|
Net interest income
after provision for loan losses
|
7,004,878
|
|
6,815,461
|
|
27,801,422
|
|
25,766,931
|
Noninterest
income
|
908,378
|
|
1,547,334
|
|
3,859,834
|
|
4,294,060
|
Noninterest
expense
|
25,129,394
|
|
6,635,310
|
|
51,038,155
|
|
23,104,802
|
Income (loss) before
income tax expense
|
(17,216,138)
|
|
1,727,485
|
|
(19,376,899)
|
|
6,956,189
|
Income tax expense
(benefit)
|
(4,674,613)
|
|
256,938
|
|
(5,292,413)
|
|
1,278,238
|
Net income
(loss)
|
(12,541,525)
|
|
1,470,547
|
|
(14,084,486)
|
|
5,677,951
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
13,526,625
|
|
N/A
|
|
13,526,625
|
|
N/A
|
Weighted average
shares outstanding:
|
12,453,667
|
|
N/A
|
|
12,463,689
|
|
N/A
|
Earnings (Loss) Per
Share for period July 2, 2019 to December 31, 2019
|
|
|
|
|
|
|
|
Basic
|
$
(1.01)
|
|
N/A
|
|
$
(1.27)
|
|
N/A
|
Diluted
|
$
(1.01)
|
|
N/A
|
|
$
(1.27)
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER FINANCIAL
DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets (annualized)
|
(5.17%)
|
|
0.71%
|
|
(1.48%)
|
|
0.71%
|
Return on average
equity (annualized)
|
(25.85%)
|
|
1.75%
|
|
(10.77%)
|
|
6.89%
|
Net interest
margin
|
3.33%
|
|
3.56%
|
|
3.34%
|
|
3.57%
|
Interest rate
spread
|
2.95%
|
|
3.35%
|
|
3.02%
|
|
3.40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
SELECTED FINANCIAL
CONDITION DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
986,042,071
|
|
$
849,618,363
|
|
|
|
|
Cash and cash
equivalents
|
40,596,877
|
|
14,971,170
|
|
|
|
|
Investment
securities
|
217,701,245
|
|
143,562,461
|
|
|
|
|
Loans and leases, net
of allowance for losses
|
687,258,190
|
|
654,755,066
|
|
|
|
|
Premises and
equipment, net
|
14,087,169
|
|
14,025,476
|
|
|
|
|
Federal Home Loan
Bank stock
|
7,600,400
|
|
6,560,600
|
|
|
|
|
Other
assets
|
18,798,190
|
|
15,743,590
|
|
|
|
|
Deposits
|
617,218,813
|
|
620,636,820
|
|
|
|
|
Borrowings
|
154,000,000
|
|
136,100,000
|
|
|
|
|
Total stockholders'
equity
|
187,787,446
|
|
85,853,032
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value
(GAAP)
|
$
187,787,446
|
|
$
85,853,032
|
|
|
|
|
Tangible book value
(non-GAAP)
|
187,787,446
|
|
85,853,032
|
|
|
|
|
Book value per
share
|
13.88
|
|
N/A
|
|
|
|
|
Tangible book value
per share
|
13.88
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
RATIOS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
and lease losses to total loans and leases
|
1.02%
|
|
0.85%
|
|
|
|
|
Allowance for loan
and lease losses to non-performing loans and leases
|
185.97%
|
|
122.40%
|
|
|
|
|
Nonperforming loans
and leases to total loans and leases
|
0.55%
|
|
0.69%
|
|
|
|
|
Nonperforming assets
to total assets
|
0.39%
|
|
0.56%
|
|
|
|
|
Net charge-offs
(annualized) to average loans and leases outstanding
|
0.16%
|
|
0.14%
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP
Financial Measures
|
|
|
|
|
|
NON-GAAP
RECONCILIATIONS:
|
|
|
|
|
|
($ in thousands,
except EPS, shares)
|
4Q
2019
|
|
Adjustments
|
|
Adjusted 4Q
2019
|
|
|
|
|
|
|
Net interest income
and noninterest income
|
$
8,797
|
|
$
-
|
|
$
8,797
|
Less: Provision for
loan and lease losses
|
(885)
|
|
-
|
|
(885)
|
Less: Noninterest
expenses
|
(25,129)
|
|
19,298
|
|
(5,831)
|
Income (loss) before
income taxes
|
(17,217)
|
|
19,298
|
|
2,081
|
Income taxes
(benefit)
|
(4,675)
|
|
5,005
|
|
330
|
Net income
(loss)
|
(12,542)
|
|
14,293
|
|
1,751
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
12,453,667
|
|
|
|
12,453,667
|
Earnings (Loss) Per
Share
|
|
|
|
|
|
Basic
|
$
(1.01)
|
|
|
|
$
0.14
|
Diluted
|
$
(1.01)
|
|
|
|
$
0.14
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
Year
Ended
|
|
|
|
Year
Ended
|
($ in thousands,
except EPS, shares)
|
December 31,
2019
|
|
Adjustments
|
|
December 31,
2019
|
|
|
|
|
|
|
Net interest income
and noninterest income
|
$
34,260
|
|
$
-
|
|
$
34,260
|
Less: Provision for
loan and lease losses
|
(2,600)
|
|
-
|
|
(2,600)
|
Less: Noninterest
expenses
|
(51,038)
|
|
27,250
|
|
(23,788)
|
Income (loss) before
income taxes
|
(19,378)
|
|
27,250
|
|
7,872
|
Income taxes
(benefit)
|
(5,292)
|
|
6,759
|
|
1,467
|
Net income
(loss)
|
(14,086)
|
|
20,491
|
|
6,405
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
12,463,689
|
|
|
|
12,463,689
|
Earnings (Loss) Per
Share for period July 2, 2019 to December 31, 2019
|
|
|
|
|
|
Basic
|
$
(1.27)
|
|
|
|
$
0.27
|
Diluted
|
$
(1.27)
|
|
|
|
$
0.27
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/richmond-mutual-bancorporation-inc-announces-fourth-quarter-and-full-year-financial-results-300997103.html
SOURCE Richmond Mutual Bancorporation, Inc.