RMBI

Richmond Mutual ($RMBI) CEO Buys 51,253 Shares Ahead of $2.6B Merger, But Nonperforming Loans Triple Year-Over-Year

01/30/2026 19:58

Richmond Mutual Bancorporation ($RMBI) operates as a regional bank holding company headquartered in Richmond, Indiana, running First Bank Richmond. Founded in 1887, the company maintains 13 branches in Indiana and 6 in Ohio, providing comprehensive banking services including deposits, commercial real estate lending, and consumer finance. With a current market cap of approximately $146 million, this small-cap bank has maintained a conservative management strategy focused on community banking. On November 20, 2025, CEO Garry Kleer purchased 51,253 shares of company stock. This wasn't a token gesture—it represented substantial insider commitment. Earlier in July 2025, the buying spree included CFO Bradley Glover acquiring 47,126 shares, SVP Paul Witte purchasing 7,947 shares, and Market President William A. Jr. buying 25,000 shares. Director Blum added 4,000 shares in 2024 at prices ranging from $11.57 to $12.63, which have since appreciated 14-24% to the current $14.42 level. This sustained insider buying over more than a year signals strong internal confidence in the company's future trajectory. The confidence stems from a transformational strategic merger announced November 12, 2025. $RMBI is combining with The Farmers Bancorp of Frankfort, Indiana in an approximately $82 million transaction. Farmers shareholders will receive 3.40 RMBI shares per share, giving them roughly 38% ownership of the combined entity. Expected to close in Q2 2026, the merger will create a regional bank with approximately $2.6 billion in total assets and a 24-branch network. Management describes this as transformational because it extends beyond simple scale expansion to significantly strengthen market presence across Central Indiana and Western Ohio. Financial performance shows positive momentum. Q4 2025 results released January 22, 2026 showed net income of $3.4 million ($0.35 per share), up 36% from $2.5 million ($0.24 per share) in Q4 2024. For full-year 2025, earnings per share grew 27.2% to $1.17 from $0.92 in 2024. The standout metric is net interest margin (NIM) improvement—Q4 NIM reached 3.11% annualized, up 41 basis points from 2.70% in the prior-year quarter. This reflects both rising asset yields and declining funding costs, demonstrating effective management of the interest rate environment. However, credit quality metrics flash warning signs. Q4 2025 nonperforming loans (NPLs) totaled $17.4 million, representing 1.46% of total loans. This compares to $10.8 million (0.90%) in Q3 2025 and $6.8 million (0.58%) in Q4 2024—nearly tripling year-over-year. While the allowance for credit losses at $16.5 million (1.38% of loans) appears adequate, the accelerating NPL trend raises concerns. Management attributed this to commercial portfolio loan growth and increased charge-offs, but whether this represents a temporary blip or structural deterioration requires close monitoring amid 2026 recession concerns. Valuation presents an interesting picture. $RMBI trades at 0.95x book value, below its $13.88 book value per share. The trailing P/E ratio of 11.97x appears reasonable for regional banks. The dividend yield of 4.36% (annual $0.60) is attractive, and the five-year beta of 0.27 indicates low volatility and defensive characteristics. Return on equity of 8.31% is modest for a bank, but considering NIM expansion and potential merger synergies, there's room for improvement. The investment decision hinges on post-merger synergy realization and credit quality management capability. In a positive scenario, the merger closes successfully, economies of scale improve cost efficiency, and expanded market presence drives loan growth and fee income. The current 0.95x P/B ratio could represent an attractive entry point. Heavy insider buying, especially by the CEO, suggests management assigns high probability to this outcome. The negative scenario involves sustained NPL growth, additional credit losses from 2026 economic slowdown, and unexpected integration costs or cultural friction. Q4 already saw $467,000 in merger-related expenses ($0.04 per share impact), and integration through H1 2026 could pressure profitability further. Small-cap liquidity constraints (average daily volume of 18,144 shares) add execution risk. Investors should monitor specific indicators. First, track quarterly NPL ratios—stabilization or decline from 1.46% is positive, but exceeding 1.8-2.0% signals intensifying credit risk. Second, watch Q1 2026 results (expected April) for merger progress and integration cost guidance. Third, verify NIM maintains above 3.0%—Fed policy shifts pressuring margins would weaken profitability momentum. Short-term (1-6 months), $RMBI likely trades between merger anticipation and credit concerns. As the Q2 2026 closing approaches, synergy expectations could drive upside, but quarterly results will hinge on NPL trends. At $14.42, the stock reflects substantial merger news—near-term investors might wait for pullbacks toward $13.00-$13.50 for attractive entry. Long-term (6+ months), the investment thesis rests on combined company competitiveness. A $2.6 billion asset base provides meaningful regional scale, and 24 branches offer solid Central Indiana and Western Ohio positioning. If $RMBI maintains its community banking culture while realizing scale economies, it could become an attractive dividend and value play for patient investors. However, structural challenges including fintech competition, regulatory burden, and digital transformation demands require strong execution beyond merger completion. In conclusion, $RMBI stands at an inflection point. Strong insider buying, improving profitability and NIM, and strategic merger represent clear positives. Below-book valuation and 4%+ dividend yield add appeal. But surging NPLs, merger execution risk, and limited liquidity demand caution. Conservative investors should await Q1 2026 results confirming NPL stabilization and merger progress. Long-term value investors targeting regional bank consolidation beneficiaries might consider scaled purchases on pullbacks toward $13.00-$13.50. The key: NPLs stabilizing below 1.5% and merger closing on schedule in Q2 2026.