Richmond Mutual Bancorp Inc (RMBI, Financial) released its 8-K filing on July 26, 2024, detailing its financial performance for the second quarter of 2024. Richmond Mutual Bancorp Inc is a United States-based banking company that primarily attracts deposits from the general public and brokered deposits, investing those funds in various loans and leases.
Performance Overview
For the second quarter of 2024, Richmond Mutual Bancorp Inc reported a net income of $2.1 million, or $0.20 diluted earnings per share. This represents a decline from the $2.4 million, or $0.23 diluted earnings per share, reported in the first quarter of 2024, and a further drop from the $2.7 million, or $0.26 diluted earnings per share, reported in the second quarter of 2023.
Key Financial Metrics
Richmond Mutual Bancorp Inc's total assets remained steady at $1.5 billion as of June 30, 2024. Loans and leases, net of allowance for credit losses, also held steady at $1.1 billion. However, nonperforming loans and leases increased to $7.7 million, or 0.67% of total loans and leases, up from $6.9 million, or 0.61%, at the end of the first quarter of 2024.
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income | $2.1 million | $2.4 million | $2.7 million |
| Diluted EPS | $0.20 | $0.23 | $0.26 |
| Total Assets | $1.5 billion | $1.5 billion | $1.4 billion |
| Nonperforming Loans | $7.7 million | $6.9 million | $8.0 million |
Income Statement Highlights
Net interest income for the second quarter of 2024 decreased by $257,000, or 2.6%, to $9.6 million compared to the first quarter of 2024. This decline was attributed to a 10 basis point decrease in the average interest rate spread and a $10.7 million decrease in average net earning assets. However, net interest income increased by $243,000, or 2.6%, from the second quarter of 2023.
Interest income rose by $575,000, or 2.9%, to $20.1 million during the quarter, driven by a $23.9 million increase in the average balance of loans and leases and a seven basis point increase in the average yield earned on loans and leases. Conversely, interest expense surged by $832,000, or 8.6%, to $10.5 million, primarily due to higher rates paid on deposits and borrowings.
Balance Sheet and Cash Flow
Total deposits increased to $1.1 billion at the end of the second quarter, up from $1.0 billion at the end of 2023. Noninterest-bearing deposits, however, decreased to $102.8 million, or 9.3% of total deposits, down from $114.4 million, or 11.0%, at the end of 2023. Stockholders' equity also saw a decline, totaling $131.1 million at the end of the quarter, compared to $134.9 million at the end of 2023.
Management Commentary
"Our average deposit balances increased during the quarter and with the continued pressure on our net interest margin due to our interest-bearing liabilities being more sensitive to rising rates than our interest earning assets, this impacted our net income. The performance of our loan portfolio continues to be strong and we are looking forward to a moderation in the interest rate environment in the future," commented Garry Kleer, Chairman, President, and Chief Executive Officer.
Analysis
The decline in net income for Richmond Mutual Bancorp Inc highlights the challenges faced by the banking sector amidst rising interest rates. While the company has managed to maintain steady asset levels and increase interest income, the rising cost of interest-bearing liabilities has put pressure on net interest margins. The increase in nonperforming loans and leases is also a concern, indicating potential credit risks.
Despite these challenges, the company's strong loan portfolio and strategic management of deposits provide a solid foundation for future growth. Investors will need to monitor the interest rate environment and the company's ability to manage its interest-bearing liabilities effectively.
Explore the complete 8-K earnings release (here) from Richmond Mutual Bancorp Inc for further details.
