Richmond Mutual Bancorporation, Inc. (RMBI) stock intrinsic value fair value estimate & owner earnings analysis

Richmond Mutual Bancorporation is the holding company for First Bank Richmond, a community bank founded in 1887 and headquartered in Richmond, Indiana. It takes deposits and makes commercial real estate, commercial and industrial, residential mortgage and consumer loans through branches in Indiana and Ohio. About 49% of its deposits sit in its Richmond main office, so the franchise is small and concentrated in a few communities. What we measured. For a bank we start from operating cash flow, subtract stock-based compensation, remove the swing in accrued interest receivable and payable, and subtract only the maintenance portion of capital spending (which is tiny, about $0.3 to $1.8 million a year). On that basis the business earned roughly $1.28, $1.42, $0.79, $1.25 and $1.57 per share in 2020 and 2022 through 2025. We left out 2021, when the company paid $17.45 million to exit a multi-employer pension plan, a one-time cash cost that will not recur, and 2019, the partial year following the company's stock conversion. The middle of the 2020 and 2022-2025 range is about $1.30 per share, which we use as the normal earning power. Net interest income fell in 2023 (from $41.6 million to $37.7 million) and reached a high of $43.8 million in 2025, so 2023 was the weak year and 2025 the strong one, and the middle figure sits between them. Growth path. Owner earnings per share rose about 26% in 2025 (from $1.25 to $1.57), but we assume no growth in the first year of the base case, well below that figure, because we cannot name a contract or backlog that repeats it. We credited no loan growth, no margin expansion and no benefit from the pending merger. The one repeatable feature we noted is a steady share count decline (about 12.5 million diluted shares in 2019 to about 9.9 million in 2025), but that depends on management buying at attractive prices, so we did not credit it. Base case, $18. About $1.30 per share held for ten years, then fading slowly at about 2% a year, since a 139-year-old deposit franchise with positive earnings every year since 2020 does not vanish but has no evidenced source of further growth. Bear case, $9.50. Earnings settle near $0.75 a share, the level of 2019 and 2023, for a decade and then fade about 4% a year. This is built on a disclosed pressure point: non-performing loans rose to $17.4 million (1.46% of loans) at the end of 2025 from $6.8 million (0.58%) a year earlier, and commercial loans (commercial real estate and commercial and industrial) make up roughly 64% of the loan book, with construction lending having grown sharply since 2020. The allowance for credit losses was $16.5 million (1.38% of loans), so further deterioration would reach earnings directly. Bull case, $24. Earnings hold at the 2025 level of about $1.60 per share for ten years, with only a 1% annual fade afterward. This needs no new drivers, only that 2025 proves to be the normal level rather than the peak. Pending merger. The company agreed in November 2025 to acquire Farmers Bancorp in a stock deal valued at about $82 million, after which Farmers holders would own about 38% of the combined company; closing was expected in the second calendar quarter of 2026. Our values are per share for the company as it stood at the end of 2025. Issuing about 38% of the combined company adds earnings but also shares, so we assume it neither adds nor subtracts value per share. What could make this wrong. If the rise in problem loans proves temporary and earnings stay near 2025 levels, the shares are worth more than the base case. If commercial real estate losses continue to grow, the bear case is closer to reality. Our owner-earnings figure treats changes in accrued interest receivable and payable as the working-capital movement; changes in other assets and other liabilities are left inside operating cash flow. The margin-of-safety price is $11.50, which leaves room for the credit-quality question and for the added share issuance from the merger.