Document

RICHMOND, INDIANA (January 27, 2022) – Richmond Mutual Bancorporation, Inc., a Maryland corporation (the “Company”) (NASDAQ: RMBI), parent company of First Bank Richmond (the “Bank”), today announced net income of $2.7 million, or $0.24 diluted earnings per share, for the fourth quarter of 2021, compared to net income of $3.1 million, or $0.27 diluted earnings per share, for the third quarter of 2021, and net income of $2.5 million, or $0.21 diluted earnings per share, for the fourth quarter of 2020. Net income was $11.1 million, or $0.96 diluted earnings per share for the year ended December 31, 2021, compared to net income of $10.0 million, or $0.82 diluted earnings per share for the year ended December 31, 2020.

The Company recorded an additional one-time expense of $665,000, pre-tax, during the fourth quarter of 2021 to complete the termination of its defined benefit pension plan (the “DB Plan”). Net income, excluding the one-time charge associated with the DB Plan, was $3.2 million, or $0.28 diluted earnings per share for the fourth quarter of 2021, compared to net income of $3.1 million, or $0.27 diluted earnings per share, for the third quarter of 2021, and net income of $2.5 million, or $0.21 diluted earnings per share, for the comparable quarter of 2020. Net income, excluding the one-time charge, was $11.6 million, or $1.00 diluted earnings per share for the year ended December 31, 2021, compared to net income of $10.0 million, or $0.82 diluted earnings per share for the year ended December 31, 2020. Management believes it is appropriate to eliminate this one-time charge as it is not reflective of the Company’s ongoing operations and the presentation of these adjusted financial measures is more meaningful to investors in evaluating the financial results of the Company. See the section entitled “Non-GAAP Reconciliations” at the end of this release for a reconciliation of net income.

Garry Kleer, Chairman, President and Chief Executive Officer, commented, “Despite the many challenges we experienced in 2021, it was a strong year for the Company. We generated record earnings and produced core loan and lease and deposit growth during the year. Looking forward, we anticipate having another solid year even though the earnings benefit provided by the PPP in 2021 will not be present. Over the past few quarters, we have experienced pressure on our margins due to the low interest rate environment. However, the recent comments by the Fed suggesting rate increases in 2022 are promising for future margin expansion and earnings for our Company and the industry.”

Total assets increased $180.8 million, or 16.7%, to $1.3 billion at December 31, 2021, from $1.1 billion at December 31, 2020. The increase was primarily the result of a $98.4 million, or 13.4%, increase in loans and leases, net of allowance, to $832.8 million and a $109.8 million, or 42.8%, increase in investment securities to $366.6 million at December 31, 2021. The increase in loans and leases was attributable to an increase in multi-family loans of $51.4 million, an increase in construction and development loans of $35.3 million, an increase in commercial real estate loans of $13.6 million, and an increase in residential loans and leases of $9.0 million and $9.6 million, respectively. Commercial and industrial loans declined $23.1 million due to a decrease in PPP loans of $34.0 million resulting from PPP loan forgiveness by the SBA. As of December 31, 2021, we had funded a total of 892 PPP loans totaling $103.1 million and the SBA had approved 802 loan forgiveness applications totaling $92.1 million. PPP loans totaled $9.4 million at December 31, 2021.

Nonperforming loans and leases, consisting of nonaccrual loans and leases and accruing loans and leases more than 90 days past due, totaled $8.0 million or 0.95% of total loans and leases at December 31, 2021, compared to $8.5 million or 1.05% at September 30, 2021 and $4.8 million or 0.65% at December 31, 2020. The increase in nonperforming loans and leases from December 31, 2020 was primarily the result of a $4.9 million nonaccrual commercial real estate loan that is currently subject to litigation between the developer and other parties. At the time of origination, this loan had a loan to value ratio of 73%. Accruing loans past due more than 90 days at December 31, 2021 totaled $1.8 million, compared to $2.3 million at September 30, 2021 and $4.0 million at December 31, 2020.

The allowance for loan and lease losses increased $259,000, or 2.2%, to $12.1 million at December 31, 2021 from $11.8 million at September 30, 2021, and increased $1.5 million, or 14.4%, from $10.6 million at December 31, 2020. At December 31, 2021, the allowance for loan and lease losses totaled 1.43% of total loans and leases outstanding compared to 1.47% at September 30, 2021 and 1.42% at December 31, 2020. The allowance for loan and lease losses to total loans at December 31, 2021, September 30, 2021, and December 31, 2020 would increase two, three, and eight basis points, respectively, if PPP loans, which totaled $9.4 million, $16.3 million, and $43.3 million at December 31, 2021, September 30, 2021 and December 31, 2020, respectively, and are 100% guaranteed by the SBA, are excluded from the calculation. Net recoveries during 2021 were $91,000 or 0.01% of average loans and leases outstanding, compared to net charge-offs of $273,000 during 2020.

Management regularly analyzes conditions within its geographic markets and evaluates its loan and lease portfolio. The Company evaluated its exposure to potential loan and lease losses as of December 31, 2021, which evaluation included consideration of potential credit losses due to economic conditions driven by the impact of the COVID-19 pandemic. The full impact of the pandemic on the Company’s deposit and loan customers is still not fully known at this time. Credit metrics are being reviewed and stress testing is being performed on the loan portfolio on an ongoing basis. Potentially higher risk segments of the portfolio, such as hotels and restaurants, are being closely monitored.

Total deposits increased $75.9 million or 9.2% to $900.2 million at December 31, 2021, compared to September 30, 2021 and increased $207.1 million or 29.9% compared to December 31, 2020. The increase in deposits from September 30, 2021 primarily was due to an increase in brokered time deposits of $58.0 million, and the increase from December 31, 2020 primarily was due to a $98.5 million increase in brokered time deposits, overall changes in spending and savings habits by businesses and consumers due to the COVID-19 pandemic, as well as additional PPP funds and stimulus payments made in December 2020 and first quarter 2021. Brokered time deposits totaled $121.8 million, or 13.5% of total deposits, at December 31, 2021 compared to $63.8 million, or 7.7% of total deposits, at September 30, 2021 and $23.3 million, or 3.4% of total deposits, at December 31, 2020. Management increased longer-term brokered time deposits as a result of continued low rates being offered in the market for brokered time deposits. Interest-bearing demand deposit and savings accounts increased $11.0 million, or 2.7%, to $418.3 million at December 31, 2021 from September 30, 2021, and increased $66.5 million, or 18.9%, from

Stockholders’ equity totaled $180.5 million at December 31, 2021, an increase of $1.8 million or 1.0% from September 30, 2021 and a decrease of $12.2 million or 6.3% from December 31, 2020. The increase in stockholders’ equity from September 30, 2021 primarily was the result of net income of $2.7 million, offset by the payment of $799,000 in dividends to Company stockholders and the repurchase of $734,000 of Company common stock. The decrease in stockholders’ equity from the year ended December 31, 2020 primarily was the result of the repurchase of $11.9 million of Company common stock, the payment of $9.3 million in dividends to Company stockholders and a reduction in accumulated comprehensive income of $4.9 million, partially offset by net income of $11.1 million.

During the quarter ended December 31, 2021, the Company repurchased a total of 45,945 shares of Company common stock at an average price of $15.97 per share. As of December 31, 2021, the Company had approximately 999,553 shares available for repurchase under its existing stock repurchase programs. Subsequent to quarter end through January 27, 2022, the Company purchased an additional 52,515 shares, leaving 947,038 shares available for future repurchase.

Net interest income before the provision for loan and lease losses increased $136,000, or 1.4%, to $10.1 million in the fourth quarter of 2021, compared to $10.0 million in the third quarter of 2021, and increased $1.1 million, or 12.8%, from $8.9 million in the fourth quarter of 2020. The increase from the third quarter of 2021 was due to a $54.9 million increase in average interest-earning assets during the fourth quarter of 2021, partially offset by a nine basis point decrease in the average interest rate spread. The increase from the comparable quarter in 2020 was due to an increase in average interest-earning assets of $184.5 million during the fourth quarter of 2021 compared to the comparable quarter of 2020, partially offset by a seven basis point decrease in the average interest rate spread during the fourth quarter of 2021 compared to the comparable quarter in 2020.

Interest income increased $130,000, or 1.1%, to $12.0 million during the quarter ended December 31, 2021, compared to the quarter ended September 30, 2021 and increased $1.0 million, or 9.4%, compared to quarter ended December 31, 2020. Interest income on loans and leases was steady at $10.4 million for the quarter ended December 31, 2021 compared to the third quarter of 2021, as a $34.9 million increase in the average balance of loans and leases was offset by a decrease in the average yield earned on loans and leases of 24 basis point to 5.08%. Interest income on loans and leases increased $384,000, or 3.8%, in the fourth quarter of 2021 compared to the fourth quarter of 2020, due to an increase in the average balance of loans and leases of $66.4 million, partially offset by a decrease in the average loan and lease yield of 25 basis points.

Interest income on investment securities, excluding FHLB stock, increased $123,000, or 8.9%, to $1.5 million during the quarter ended December 31, 2021, compared to the quarter ended September 30, 2021, and increased $634,000, or 72.4%, from the comparable quarter in 2020. The increase in interest income on investment securities, excluding FHLB stock, from the comparable periods ended September 30, 2021 and December 31, 2020 was due to a $13.5 million and $120.2 million increase in the average balance and a seven basis point and 23 basis point increase in the average yield earned on investment securities, respectively.

Interest expense remained relatively flat at $1.9 million for the quarter ended December 31, 2021 compared to the quarter ended September 30, 2021, and decreased $110,000, or 5.4%, compared to the quarter ended December 31, 2020. Interest expense on deposits increased $19,000, or 1.6%, to $1.3 million for the quarter ended December 31, 2021, compared to the previous quarter primarily due to a $33.3 million increase in average interest-bearing certificate of deposit account balances, partially offset by a decrease of 10 basis points in the average rate paid on those accounts. The decrease from the comparable quarter in 2020 was due to a decrease of 20 basis points in the average rate paid on interest-bearing deposits, partially offset by an increase of $155.7 million in average interest-bearing deposit balances. The average rate paid on interest-bearing deposits was 0.68% for the quarter ended December 31, 2021, compared to 0.70% and 0.88% for the quarters ended September 30, 2021 and December 31, 2020, respectively. Interest expense on FHLB borrowings decreased $26,000, or 3.7%, to $663,000 for the fourth quarter of 2021 compared to the previous quarter and decreased $74,000, or 10.1%, from the comparable quarter in 2020. The average balance of FHLB borrowings totaled $191.4 million during the quarter ended December 31, 2021, compared to $179.4 million and $173.4 million for the quarters ended September 30, 2021 and December 31, 2020, respectively. The average rate paid on FHLB borrowings was 1.39% for the quarter ended December 31, 2021, 1.54% for September 30, 2021, and 1.70% for the fourth quarter of 2020.

Annualized net interest margin decreased to 3.31% for the fourth quarter of 2021, compared to 3.42% for the third quarter of 2021 and 3.46% for the fourth quarter of 2020. The decrease in the net interest margin for the fourth quarter of 2021 compared to the third quarter of 2021 and the comparable quarter in 2020 was due to increases in total average interest earning assets and compression in the average interest rate spread.

There was no provision for loan and lease losses recorded for the three months ended December 31, 2021, compared to $500,000 for the quarter ended September 30, 2021 and $940,000 for the quarter ended December 31, 2020. Net recoveries during the fourth quarter of 2021 were $259,000, compared to net charge-offs of $82,000 during the third quarter of 2021 and $163,000 in the fourth quarter of 2020. While we believe the steps we have taken and continue to take are necessary to effectively manage our portfolio and assist our clients through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic, uncertainties relating to our allowance for loan losses are heightened as a result of the risks surrounding the COVID-19 pandemic, including whether government relief will provide adequate relief to borrowers. The ultimate impact will depend on future developments, including the scope and duration of the pandemic and further actions taken by government authorities in response to the pandemic.

Total noninterest income decreased $43,000, or 3.7%, to $1.1 million for the quarter ended December 31, 2021 compared to the quarter ended September 30, 2021, and decreased $848,000, or 43.5%, from the comparable quarter in 2020. The decrease in noninterest income in the fourth quarter of 2021 from the third quarter of 2021 and the fourth quarter of 2020 resulted primarily from a decrease in gains on loan and lease sales. Gain on sale of loans and leases declined $197,000, or 35.5% in the fourth quarter of 2021 compared to the third quarter of 2021, and decreased $687,000, or 65.7% from the fourth quarter of 2020 as mortgage banking activity declined primarily due to lower refinancing activity and a lower supply of houses for sale in the Bank’s market area. Loan and lease servicing fees increased $135,000 in the fourth quarter of 2021 compared to the third quarter of 2021 as an impairment charge of $129,000 to mortgage servicing rights was recorded in the fourth quarter of 2021 compared to an impairment charge of $251,000 recorded in the third quarter of 2021. Loan and lease servicing fees declined $234,000 in the fourth quarter of 2021 compared to the same quarter in 2020 as a recovery of impaired mortgage servicing rights of $98,000 was recorded in the fourth quarter of 2020. Card fee income increased $36,000, or 13.7% to $303,000 in the fourth quarter of 2021 from the third quarter of 2021, and increased $60,000, or 24.6% from $243,000 in the fourth quarter of 2020. Service fees on deposit accounts increased $16,000, or 6.8%, to $252,000 for the quarter ended December 31, 2021, compared to $236,000 for the third quarter of 2021, and increased $32,000, or 14.7%, from $220,000 for the quarter ended December 31, 2020. The increase in service fees on deposit accounts during the fourth quarter of 2021 compared to the third quarter of 2021, and the fourth quarter of 2020 was primarily due to increased overdraft fees.

Total noninterest expense increased $1.1 million to $7.9 million for the three months ended December 31, 2021, compared to both the third quarter of 2021 and the same period in 2020. Salaries and employee benefits increased $948,000, or 22.5%, to $5.2 million for the quarter ended December 31, 2021, compared to the third quarter of 2021, and increased $666,000, or 14.8%, from the quarter ended December 31, 2020. The increase in salaries and benefits in the fourth quarter of 2021 from the third quarter of 2021 was primarily due to several open positions being filled and a $665,000 expense associated with the termination of the Company’s DB Plan in the fourth quarter of 2021. The increase in salaries and benefits from the fourth quarter of 2020 primarily was due to the DB Plan termination expense of $665,000, an increase in personnel during the year, increased ESOP expense of $49,000 resulting from an increase in the Company’s stock price, and normal merit increases partially offset by a decrease of $423,000 of expenses associated with the acceleration of restricted stock awards upon the death of a director during the fourth quarter of 2020. Other expenses increased $114,000, or 12.9% in the fourth quarter of 2021 compared to the prior quarter, and increased $227,000, or 29.2%, compared to the same quarter of 2020. The increase in other expenses in the fourth quarter of 2021 from the fourth quarter of 2020 primarily was due to increased franchise tax expense.

Income tax expense decreased $146,000 during the three months ended December 31, 2021 compared to the prior quarter due to a lower level of pre-tax income and a lower effective tax rate. Income tax expense decreased $47,000 during the three months ended December 31, 2021, compared to the same period in 2020 due to a lower effective tax rate. The effective tax rate for the fourth quarter of 2021 was 16.3% compared to 18.0% in the third quarter, and 18.6% in the fourth quarter a year ago. The reduction in the effective tax rate for the fourth quarter of 2021 was primarily due to increased holdings of tax-free municipal securities.

This document and other filings by the Company with the Securities and Exchange Commission (the "SEC"), as well as press releases or other public or stockholder communications released by the Company, may contain forward-looking statements, including, but not limited to, (i) statements regarding the financial condition, results of operations and business of the Company, (ii) statements about the Company's plans, objectives, expectations and intentions and other statements that are not historical facts and (iii) other statements identified by the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "intends" or similar expressions that are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current beliefs and expectations of the Company's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: the effect of the COVID-19 pandemic, including on the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties such as the extent and duration of the impact of the pandemic on public health, the U.S. and global economies, and on consumer and corporate customers, including economic activity, employment levels and market liquidity; legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; changes in management's business strategies; changes in the regulatory and tax environments in which the Company operates; and other factors set forth in the Company's filings with the SEC.

The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. When considering forward-looking statements, keep in mind these risks and uncertainties. Undue reliance should not be placed on any forward-looking statement, which speaks only as of the date made. Refer to the Company's periodic and current reports filed with the SEC for specific risks that could cause actual results to be significantly different from those expressed or implied by any forward-looking statements.


	Three Months Ended						Year Ended
SELECTED OPERATIONS DATA:	December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
(In thousands, except for per share amounts)

Interest income	$	12,030	$	11,900	$	10,992	$	45,926	$	42,861
Interest expense	1,936		1,942		2,046		7,682		9,393
Net interest income	10,094		9,958		8,946		38,244		33,468

Provision for loan losses	—		500		940		1,430		3,770
Net interest income after provision	10,094		9,458		8,006		36,814		29,698
Noninterest income	1,102		1,145		1,951		5,416		6,806
Noninterest expense	7,947		6,844		6,852		28,649		24,009
Income before income tax expense	3,249		3,759		3,105		13,581		12,495
Income tax provision	530		677		577		2,436		2,477

Net income	$	2,719	$	3,082	$	2,528	$	11,145	$	10,018

Shares outstanding	12,400		12,432		13,194		12,400		13,194
Average shares outstanding:
Basic	11,104		11,173		11,832		11,356		12,264
Diluted	11,465		11,473		11,928		11,632		12,286
Earnings per share:
Basic	$	0.24	$	0.28	$	0.21	$	0.98	$	0.82
Diluted	$	0.24	$	0.27	$	0.21	$	0.96	$	0.82


SELECTED FINANCIAL CONDITION DATA:	December 31, 2021		September 30, 2021		June 30, 2021		December 31, 2020
(In thousands, except for per share amounts)

Total assets	$	1,264,972	$	1,230,712	$	1,188,480	$	1,084,192
Cash and cash equivalents	23,038		19,837		17,087		48,768
Investment securities	366,579		367,658		339,630		256,730
Loans and leases, net of allowance	832,846		795,407		785,339		734,413
Loans held for sale	558		903		603		1,987
Premises and equipment, net	14,347		14,227		14,441		14,892
Federal Home Loan Bank stock	9,992		9,542		9,050		9,050
Other assets	17,612		23,138		22,330		18,352
Deposits	900,175		824,257		793,070		693,045
Borrowings	180,000		202,000		189,000		170,000
Total stockholder’s equity	180,481		178,638		182,569		192,713

Book value (GAAP)	$	180,481	$	178,638	$	182,569	$	192,713
Tangible book value (non-GAAP)	180,481		178,638		182,569		192,713
Book value per share (GAAP)	14.55		14.37		14.39		14.61
Tangible book value per share (non-GAAP)	14.55		14.37		14.39		14.61


(In thousands)	December 31, 2021		September 30, 2021		June 30, 2021		December 31, 2020

Commercial mortgage	$	261,202	$	255,211	$	249,376	$	247,564
Commercial and industrial	99,682		101,818		117,079		122,831
Construction and development	93,678		82,511		80,685		58,424
Multi-family	107,421		92,652		80,534		55,998
Residential mortgage	134,155		131,094		129,049		125,121
Home equity	7,146		6,784		6,325		5,982
Direct financing leases	126,762		123,025		121,006		117,171
Consumer	15,905		15,347		14,676		13,257

Total loans and leases	$	845,951	$	808,442	$	798,730	$	746,348


(In thousands)	December 31, 2021		September 30, 2021		June 30, 2021		December 31, 2020

Noninterest-bearing demand	$	114,303	$	106,167	$	110,494	$	98,725
Interest-bearing demand	164,356		159,973		155,565		141,990
Savings and money market	253,957		247,310		246,542		209,861
Non-brokered time deposits	245,808		247,054		238,789		219,194
Brokered time deposits	121,751		63,753		41,680		23,275

Total deposits	$	900,175	$	824,257	$	793,070	$	693,045

Average Balances, Interest and Average Yields/Cost. The following tables set forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Average balances have been calculated using quarterly balances. Non-accruing loans have been included in the table as loans carrying a zero yield. Loan fees are included in interest income on loans and are not material.


	Three Months Ended December 31,
	2021							2020
	Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate		Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans and leases receivable	$	819,443		$	10,417	5.08	%	$	753,073		$	10,033	5.33	%
Securities	367,685			1,510		1.64	%	247,505			875		1.41	%
FHLB stock	9,936			71		2.86	%	9,166			78		3.40	%
Cash and cash equivalents and other	23,210			32		0.55	%	25,989			6		0.09	%
Total interest-earning assets	1,220,274			12,030		3.94	%	1,035,733			10,992		4.25	%

Interest-bearing liabilities:
Savings and money market accounts	262,960			335		0.51	%	215,984			274		0.51	%
Interest-bearing checking accounts	158,266			95		0.24	%	131,958			76		0.23	%
Certificate accounts	330,235			843		1.02	%	247,810			959		1.55	%
Borrowings	191,424			663		1.39	%	173,391			737		1.70	%
Total interest-bearing liabilities	942,885			1,936		0.82	%	769,143			2,046		1.06	%

Net interest income				$	10,094						$	8,946
Net earning assets	$	277,389						$	266,590

Net interest rate spread(1)						3.12	%						3.19	%

Net interest margin(2)						3.31	%						3.46	%

Average interest-earning assets to average interest-bearing liabilities	129.42		%					134.66		%


	Year Ended December 31,
	2021							2020
	Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate		Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans and leases receivable	$	786,686		$	40,579	5.16	%	$	735,959		$	38,297	5.20	%
Securities	324,372			5,022		1.55	%	241,659			4,127		1.71	%
FHLB stock	9,281			273		2.94	%	8,803			285		3.24	%
Cash and cash equivalents and other	23,750			52		0.22	%	35,247			152		0.43	%
Total interest-earning assets	1,144,089			45,926		4.01	%	1,021,668			42,861		4.20	%

Interest-bearing liabilities:
Savings and money market accounts	247,431			1,256		0.51	%	188,379			1,062		0.56	%
Interest-bearing checking accounts	154,938			362		0.23	%	118,668			293		0.25	%
Certificate accounts	287,051			3,318		1.16	%	278,018			5,028		1.81	%
Borrowings	178,540			2,746		1.54	%	175,060			3,010		1.72	%
Total interest-bearing liabilities	867,960			7,682		0.89	%	760,125			9,393		1.24	%

Net interest income				$	38,244						$	33,468
Net earning assets	$	276,129						$	261,543

Net interest rate spread(1)						3.12	%						2.96	%

Net interest margin(2)						3.34	%						3.28	%

Average interest-earning assets to average interest-bearing liabilities	131.81		%					134.41		%


	At and for the Three Months Ended
Selected Financial Ratios and Other Data:	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020
Performance ratios:
Return on average assets (annualized)	0.87	%	1.02	%	0.96	%	0.92	%	0.95	%
Return on average equity (annualized)	6.06	%	6.83	%	5.98	%	5.36	%	5.26	%
Yield on interest-earning assets	3.94	%	4.08	%	3.96	%	4.27	%	4.25	%
Rate paid on interest-bearing liabilities	0.82	%	0.87	%	0.91	%	0.96	%	1.06	%
Average interest rate spread	3.12	%	3.21	%	3.05	%	3.31	%	3.19	%
Net interest margin (annualized)(1)	3.31	%	3.42	%	3.27	%	3.53	%	3.46	%
Operating expense to average total assets (annualized)	2.55	%	2.26	%	2.36	%	2.51	%	2.57	%
Efficiency ratio(2)	70.99	%	61.74	%	63.74	%	66.27	%	62.89	%
Average interest-earning assets to average interest-bearing liabilities	129.42	%	130.45	%	132.31	%	129.96	%	134.66	%
Asset quality ratios:
Non-performing assets to total assets(3)	0.64	%	0.69	%	0.65	%	0.71	%	0.45	%
Non-performing loans and leases to total gross loans and leases(4)	0.95	%	1.05	%	0.97	%	1.05	%	0.65	%
Allowance for loan and lease losses to non-performing loans and leases(4)	150.76	%	139.23	%	147.62	%	135.07	%	220.57	%
Allowance for loan and lease losses to total loans and leases	1.43	%	1.47	%	1.43	%	1.41	%	1.42	%
Net (recoveries) charge-offs (annualized) to average outstanding loans and leases during the period	(0.13)	%	0.04	%	0.03	%	0.01	%	0.09	%
Capital ratios:
Equity to total assets at end of period	14.27	%	14.51	%	15.36	%	16.61	%	17.85	%
Average equity to average assets	14.39	%	14.93	%	15.97	%	17.18	%	18.01	%
Common equity tier 1 capital (to risk weighted assets)(5)	16.02	%	16.38	%	17.81	%	19.52	%	20.64	%
Tier 1 leverage (core) capital (to adjusted tangible assets)(5)	12.53	%	12.76	%	13.68	%	14.19	%	14.28	%
Tier 1 risk-based capital (to risk weighted assets)(5)	16.02	%	16.38	%	17.81	%	19.52	%	20.64	%
Total risk-based capital (to risk weighted assets)(5)	17.25	%	17.63	%	19.06	%	20.77	%	21.90	%
Other data:
Number of full-service offices	12		12		12		12		12
Full-time equivalent employees	173		175		178		175		170


($ in thousands, except EPS, shares)	Three Months Ended December 31, 2021		Adjustments		Adjusted Three Months Ended December 31, 2021

Net interest income and noninterest income	$	11,196	$	—	$	11,196
Less: Provision for loan and lease losses	—		—		—
Less: Noninterest expenses	(7,947)		665		(7,282)
Income (loss) before income taxes	3,249		665		3,914
Income taxes (benefit)	530		166		696
Net income (loss)	2,719		499		3,218

Average shares outstanding:
Basic	11,104				11,104
Diluted	11,465				11,465
Earnings per share:
Basic	$	0.24			$	0.29
Diluted	$	0.24			$	0.28


($ in thousands, except EPS, shares)	Year Ended December 31, 2021		Adjustments		Adjusted Year Ended December 31, 2021

Net interest income and noninterest income	$	43,660	$	—	$	43,660
Less: Provision for loan and lease losses	(1,430)		—		(1,430)
Less: Noninterest expenses	(28,649)		665		(27,984)
Income (loss) before income taxes	13,581		665		14,246
Income taxes (benefit)	2,436		166		2,602
Net income (loss)	11,145		499		11,644

Average shares outstanding:
Basic	11,356				11,356
Diluted	11,632				11,632
Earnings per share:
Basic	$	0.98			$	1.03
Diluted	$	0.96			$	1.00