Core Viewpoint - Richmond Mutual Bancorporation, Inc. reported a net income of $2.6 million for Q2 2025, reflecting a 30% increase in diluted earnings per share compared to both Q1 2025 and Q2 2024, driven by higher net interest income and lower noninterest expenses [1][2][3]. Financial Performance Highlights - Net interest income before provision for credit losses increased by $501,000, or 4.9%, to $10.8 million in Q2 2025 compared to Q1 2025, and increased by $1.2 million, or 12.4%, from Q2 2024 [5]. - The annualized net interest margin improved to 2.93% in Q2 2025, up from 2.79% in Q1 2025 and 2.64% in Q2 2024, attributed to a favorable asset repricing environment following Federal Reserve rate cuts [13][19]. - Interest income rose by $478,000, or 2.3%, to $21.3 million in Q2 2025 compared to Q1 2025, and increased by $1.3 million, or 6.3%, from Q2 2024 [6][34]. Balance Sheet Summary - Total assets remained stable at $1.5 billion as of June 30, 2025, with loans and leases net of allowance for credit losses totaling $1.2 billion [8][19]. - Nonperforming loans and leases increased to $8.1 million, or 0.68% of total loans and leases, compared to $6.8 million, or 0.58%, at the end of 2024 [21][22]. - Total deposits increased by $2.4 million, or 0.2%, to $1.1 billion at June 30, 2025, driven by increases in interest-bearing demand deposits and retail time deposits [25]. Management Insights - The CEO emphasized the strength of the bank's core banking model, focusing on customer care and disciplined decision-making amid economic uncertainties [3]. - The company is committed to maintaining solid credit quality while managing expenses effectively [3]. Stockholder Information - Stockholders' equity totaled $132.3 million at June 30, 2025, a slight decrease from December 31, 2024, primarily due to dividend payments and stock repurchases [27][28]. - The company repurchased 101,127 shares of common stock at an average price of $13.46 per share during Q2 2025 [28].

Financial Data and Key Metrics Changes - Net income for the first quarter of 2025 was $13.1 million, with a return on average assets of 1.3% and return on average equity of 13.28% [10] - The net interest margin improved to 3.45% from 3.36% in the previous quarter, driven by lower average cost of deposits [10] - Total loans held for investment increased by $89.1 million or 2.52% from the prior quarter [4][10] - Non-performing loans remained stable at 0.05% of loans held for investment [6] Business Line Data and Key Metrics Changes - The commercial real estate segment of the loan portfolio increased from 80.75% to 81.11% quarter over quarter [5] - Loan originations during the first quarter were $259.3 million, while payoffs and pay downs were $65.6 million and $104.6 million respectively [5] - Non-interest income decreased to $1.4 million from $1.7 million in the previous quarter, primarily due to a reduction in income from equity investments [11] Market Data and Key Metrics Changes - Deposits increased by $178.4 million or 5% compared to the previous quarter, driven by increases in non-interest bearing demand and various types of interest-bearing deposits [6][7] - Non-wholesale deposits increased by $48.4 million or 1.61% quarter over quarter [8] - Local agency deposits accounted for 22.4% of total deposits as of March 31, 2025 [8] Company Strategy and Development Direction - The company is focused on organic growth and disciplined business practices, aiming to benefit customers, employees, community, and shareholders [13] - Expansion into the San Francisco Bay Area is a key strategic initiative, supported by the addition of seasoned professionals [4][12] - The company aims to maintain a fortress balance sheet with a target of 10% in cash and a loan-to-deposit ratio below 100% [21] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to adapt to changing economic conditions [13] - The company anticipates loan growth of 10% to 12% for the remainder of the year, supported by a strong sales force [18][19] - Concerns regarding tariffs and economic slowdown were acknowledged, but management believes the company is well-positioned relative to competitors [30] Other Important Information - The company declared a cash dividend of $0.20 per share, expected to be paid on May 12, 2025 [9] - Five Star Bancorp was ranked third on the S&P Global Market Intelligence List of best-performing community banks in the nation [61] Q&A Session Summary Question: Loan growth outlook for the year - Management is bullish on loan growth, expecting 10% to 12% for the remainder of the year, supported by a strong sales force [18][19] Question: Reason for higher cost wholesale funding - Management indicated that core deposit growth is expected to match loan growth, and they do not anticipate additional wholesale funding [21] Question: Impact of tariffs on RV manufactured housing business - Management feels comfortable about the portfolio's performance, citing historical resilience during economic downturns [30] Question: Changes in allowance for loan losses - The increase in allowance was driven by portfolio growth and revised economic forecasts from the FOMC [34][35] Question: Loan pricing competition - Management acknowledged competitive pricing but remains satisfied with current spreads [38][39] Question: Customer hesitancy to borrow - Management noted strong demand in certain asset classes and emphasized the effectiveness of their sales force [46][47] Question: Small business borrowers' response to economic uncertainty - Management indicated that small business borrowers face high costs of borrowing, but reserves against this book remain high [53][55]