Richmond Mutual Bancorporation (RMBI) risk factors, FY2024 10-K

Risks Related to Macroeconomic Conditions

1. 01A worsening of economic conditions in our market area could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could adversely affect our operations, financial condition and earnings
2. 02Future changes in interest rates could reduce our profits and affect the value of our assets and liabilities
3. 03Monetary policy, inflation, deflation, and other external economic factors could adversely impact our financial performance and operations

Risks Related to Our Business

1. 04We have a substantial portfolio of commercial and multi-family real estate, as well as commercial and industrial loans, and intend to continue increasing originations of these loan types. These loans carry credit risks that could adversely affect our financial condition and results of operations
2. 05We have focused on growing our construction and development loan portfolio in recent years, which adds additional risks to our loan portfolio
3. 06Our portfolio of loans with a higher risk of loss is increasing and the unseasoned nature of such loans could lead to misjudgments in collectability, triggering additional provisions or charge-offs, impacting our profits
4. 07If we are unable to maintain and grow revenue from our leasing business our future revenue and earnings may be adversely impacted
5. 08Our leasing business exposes us to different credit risks than our real estate secured lending
6. 09If our allowance for credit losses is not sufficient to cover actual losses, our earnings could decrease
7. 10Reliance on lead institutions for credit quality updates in loan participations may expose us to financial, regulatory, and reputational risks
8. 11Changes in the valuation of our securities portfolio could hurt our profits and reduce our capital levels
9. 12A tightening of credit markets and liquidity risk could impair our ability to fund operations and jeopardize our financial condition
10. 13portfolio. Additionally, borrowings, particularly from the Federal Home Loan Bank and through repurchase agreements, provide us with an important source of funds
11. 14We use estimates in determining the fair value of certain assets, such as mortgage servicing rights (“MSRs”). If our estimates prove to be incorrect, we may be required to write down the value of these assets, which could adversely affect our earnings
12. 15If our investment in the Federal Home Loan Bank of Indianapolis becomes impaired, our earnings and stockholders’ equity could decrease
13. 16Our size makes it more difficult for us to compete
14. 17As a community bank, maintaining our reputation in our market area is critical to the success of our business, and the failure to do so may materially adversely affect our performance
15. 18We face significant operational risks because the financial services business involves a high volume of transactions and because of our reliance on technology
16. 19Our information systems may experience failure, interruption or breach in security
17. 20Our operations rely on certain external vendors
18. 21Our current and future uses of Artificial Intelligence (AI) and other emerging technologies may create additional risks
19. 22We are subject to environmental liability risk associated with lending activities on properties we own

Regulatory and Accounting Related Risks

1. 23We operate in a highly regulated environment and may be adversely affected by changes in federal and state laws and regulations that could increase our costs of operations
2. 24Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations
3. 25We are subject to an extensive body of accounting rules and best practices. Periodic changes to such rules may change the treatment of critical financial line items and affect our profitability
4. 26Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations

Other Risks

1. 27We may elect or be compelled to seek additional capital in the future, but that capital may not be available when it is needed or on terms acceptable to us
2. 28Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks
3. 29There may be future sales of additional common stock or preferred stock or other dilution of our equity, which may adversely affect the market price of our common stock
4. 30You may not receive dividends on our common stock