Richmond Mutual Bancorporation, Inc. (RMBI): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Richmond Mutual Bancorporation, Inc. right at a pivotal moment, where the classic community bank struggle against digital scale just hit a major inflection point. Honestly, even with a solid 3.07% Net Interest Margin in Q3 2025, the bank knows its $1.5 billion asset base needs a boost to fight the giants, which is why they just announced a transformational merger in November 2025 to create a $2.6 billion entity. This strategic move is a direct response to the intense pressures we see across all five forces, from the high cost of wholesale funding, like FHLB borrowings averaging 4.03% in Q1, to the low switching costs for your local depositors. Dig into the full breakdown below to see exactly how these competitive dynamics-supplier leverage, customer power, and the threat of fintech substitutes-are shaping Richmond Mutual Bancorporation, Inc.'s path forward.

Richmond Mutual Bancorporation, Inc. (RMBI) - Porter's Five Forces: Bargaining power of suppliers

When you look at Richmond Mutual Bancorporation, Inc.'s funding structure, you see suppliers-the providers of capital-wielding noticeable power, especially in the wholesale markets. This isn't just about where the money comes from; it's about the cost you pay for it, which directly pressures your net interest margin (NIM).

Wholesale funding power is definitely high. For the first quarter of 2025, the average rate paid on Federal Home Loan Bank (FHLB) borrowings clocked in at 4.03%. That's a significant cost of funds, and you saw the interest expense on these borrowings jump to $2.8 million for that quarter. This reliance on market-priced funding gives those FHLB counterparties leverage.

Depositors, your primary funding source, also have power, which is a classic banking dynamic. You can see this because your low-cost, noninterest-bearing deposits are relatively thin. At the end of Q1 2025 (March 31, 2025), these deposits stood at $103.4 million, representing just 9.3% of total deposits of $1.1 billion. When that base of cheap funding is small, the cost of the rest of your deposits rises.

Here's a quick look at how deposit costs compare across recent periods, showing the pressure you're under:

The competition for deposits forces you to pay more, which you can see in the average rate paid on interest-bearing deposits moving up and down, directly impacting that NIM figure. Still, the NIM improved to 2.79% in Q1 2025 from 2.70% in the prior quarter, showing some asset/liability management is helping offset funding costs.

Core technology providers hold leverage, too. You experienced this directly when you recorded a $246,000 one-time pre-tax expense in Q1 2025 related to finalizing contract negotiations with a core provider. That's a concrete example of a critical supplier extracting value. You also saw data processing fees increase to $926,000 in Q2 2025 compared to Q2 2024, partly due to increased software implementation expenses.

You need to keep a close eye on these key supplier relationships:

• FHLB borrowings cost: Average rate was 4.03% in Q1 2025.
• Core tech expense: A $246,000 one-time charge hit Q1 2025 results.
• Low-cost deposit base: Noninterest-bearing deposits were only 9.3% of total deposits as of March 31, 2025.
• Deposit competition: The average rate on interest-bearing deposits was 3.17% in Q1 2025.

Finance: draft a sensitivity analysis on a 50-basis-point increase in FHLB borrowing costs by next Tuesday.

Richmond Mutual Bancorporation, Inc. (RMBI) - Porter's Five Forces: Bargaining power of customers

You're analyzing the customer power Richmond Mutual Bancorporation, Inc. faces, and honestly, it's a mixed bag, leaning toward the customer having significant leverage in many areas.

Customer switching costs are low due to the proliferation of digital and national bank options. For depositors, moving funds is often just a few clicks away, meaning Richmond Mutual Bancorporation, Inc. must compete aggressively on rates and service for every dollar. This pressure is constant, even if customers don't act on it daily. The bank's total deposits stood at $1.1 billion as of September 30, 2025. That number, while substantial for a community bank, is fragmented across its local Indiana and Ohio markets, meaning no single customer relationship represents a massive, irreplaceable chunk of funding.

To give you a clearer picture of the scale you are working with, here are some key balance sheet figures from the Third Quarter of 2025:

For borrowers, especially commercial clients, the power to price-shop for loans from larger institutions is very real. A business looking for a multi-million dollar commercial mortgage or industrial loan can easily get quotes from regional powerhouses or even national lenders. If Richmond Mutual Bancorporation, Inc.'s loan pricing isn't sharp, those clients will walk. This is a classic buyer-power dynamic in the lending side of the business.

Still, the local focus offers a partial shield. Relationship banking and community focus partially mitigate the customer's price-sensitivity. You see this in the branch footprint: First Bank Richmond operates through eight locations in Indiana and five in Ohio, plus a loan production office. This physical presence, combined with the community-oriented approach mentioned by the CEO, Garry Kleer, helps lock in relationships that are harder to sever than a simple online savings account. Furthermore, the announced merger with The Farmers Bancorp, creating a $2.6 billion asset bank with 24 branches, is a direct strategic move to increase scale and potentially raise the cost of switching for local customers by offering a broader, yet still community-focused, network.

If onboarding for a new digital competitor takes 14+ days, churn risk rises for simple deposits, but for a commercial client, the switching cost is the time spent re-establishing a relationship with a new lender, which can be substantial. Finance: draft a sensitivity analysis on loan pricing elasticity versus the top three regional competitors by Friday.

Richmond Mutual Bancorporation, Inc. (RMBI) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive landscape for Richmond Mutual Bancorporation, Inc. (RMBI) right as they make a major strategic move. The rivalry here isn't just local; it's a constant balancing act between staying true to community roots and needing the scale to compete with giants. Honestly, the pressure from larger players is a key driver for recent actions.

Intense rivalry exists with both regional peers and much larger banks like PNC and U.S. Bancorp. While direct asset comparison is difficult without knowing the exact peer group data for late 2025, we can see how the market values Richmond Mutual Bancorporation, Inc. relative to its closest competitors and the broader sector as of October 2025. The Price-to-Earnings Ratio sits at 12.1x, which is comfortably lower than the peer average of 26.8x, but it stands above the broader US Banks industry average of 11.2x. This suggests investors see some premium for its performance but acknowledge a valuation gap compared to direct peers.

The announced merger to create a $2.6 billion asset bank is a direct strategic response to gain scale. This combination, announced November 12, 2025, with The Farmers Bancorp, is designed to unlock higher lending limits and improve liquidity, which are necessary tools in a competitive environment. Before this, Richmond Mutual Bancorporation, Inc.'s total assets were reported at $1.5 billion as of September 30, 2025.

The net interest margin of 3.07% in Q3 2025 indicates a competitive but stable pricing environment. This margin improvement, up from 2.93% in the preceding quarter and 2.60% in Q3 2024, shows pricing power is being exercised effectively, but the overall environment still demands careful asset/liability management.

The community bank focus limits geographic expansion, concentrating rivalry in local markets. The pre-merger footprint was concentrated, which naturally sharpens local competition. Here's a quick look at the operational footprint that defines this local rivalry:

The rivalry is fought on several fronts, especially as the combined entity seeks to leverage its new size:

• Gaining scale to offer higher lending limits.
• Investing in technology to match larger competitors.
• Maintaining cultural alignment with community focus.
• Driving expected 35% EPS accretion for Richmond Mutual shareholders.
• Competing for deposits, where noninterest-bearing deposits were $110.8 million (or 9.9% of total deposits) in Q3 2025.

The pre-merger structure of First Bank Richmond included eight branches in Indiana and five branches plus one loan production office in Ohio. This geographic concentration means that rivalry intensity is extremely high within those specific Central and East Central Indiana and Western/Central Ohio markets, where every basis point on a loan or deposit matters.

Richmond Mutual Bancorporation, Inc. (RMBI) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for Richmond Mutual Bancorporation, Inc. (RMBI) is substantial, stemming from non-bank entities offering comparable financial products with greater speed, lower cost, or superior digital interfaces. You must recognize that customer decisions are increasingly driven by convenience and price point, not just institutional loyalty.

Non-bank fintech lenders directly substitute for commercial and consumer loan products. The global fintech lending market size was valued at USD 589.64 billion in 2025, projecting growth to USD 2,307 billion by 2035 at a 16% CAGR. This signals a massive, growing pool of alternative credit providers. For context, in developed regions, more than half of SME loans are now sourced via fintech platforms, and 63% of U.S. personal loan originations are through digital lending channels.

Money market funds (MMFs) and online savings accounts present a strong substitution threat for traditional deposits, especially when market rates are elevated. As of May 2025, total MMF assets in the U.S. reached $7 trillion. Historically, research suggests a significant substitution effect: a 1-percentage-point increase in bank deposits is associated with a 0.2-percentage-point decline in MMF assets. For Richmond Mutual Bancorporation, Inc., while total deposits grew to $1.12 billion by September 30, 2025, the growth was driven by retail time deposits and savings/money market accounts, indicating customers are actively seeking yield outside of standard non-interest-bearing accounts.

Payment systems like Zelle and Google Pay directly substitute the bank's core transactional services. Zelle processed 2 billion payments, totaling nearly $600 billion, in the first half of 2025, representing a 19% volume increase year-over-year. Concurrently, Google Pay processed over $1.32 trillion globally in 2025, with $490 billion of that volume in the United States alone. This volume demonstrates a clear customer preference for instant, digital transfer mechanisms over traditional bank wires or ACH services for everyday needs.

Wealth management services face substitution from robo-advisors and large brokerage firms that offer lower-cost digital alternatives. The global robo-advisory market is expected to expand at a Compound Annual Growth Rate (CAGR) of 30.5% through 2030, with industry assets surpassing $1 trillion as of Q1 2025. The cost differential is a key driver for this substitution:

This fee compression forces Richmond Mutual Bancorporation, Inc.'s wealth management division to justify its value proposition beyond simple asset allocation. You see the pressure in the fact that Richmond Mutual Bancorporation, Inc.'s Noninterest Income saw a slight decrease year-over-year in Q3 2025, partly due to lower loan sales and security gains, which can sometimes be linked to fee-based activities.

The competitive landscape for deposit gathering is also shifting, as evidenced by Richmond Mutual Bancorporation, Inc.'s own deposit mix changes:

• Retail (non-brokered) time deposits increased by $16.2 million since year-end 2024.
• Savings and money market accounts grew by $6.4 million since year-end 2024.
• Noninterest-bearing deposits remained relatively flat at $110.8 million as of September 30, 2025.
• Brokered time deposits, a potentially less sticky funding source, decreased by $9.3 million since year-end 2024.

The intensity of substitution pressure is further highlighted by the sheer scale of digital payment adoption:

• Zelle person-to-small-business payment volume jumped 31% in H1 2025.
• Google Pay captured 18% of the global digital payments market in 2025.
• 49% of US Google Pay users prefer it for contactless payments.

Richmond Mutual Bancorporation, Inc. (RMBI) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Richmond Mutual Bancorporation, Inc. remains relatively low, primarily due to the significant structural barriers inherent in the commercial banking industry. These barriers act as a powerful deterrent against new traditional de novo banks attempting to establish a presence in the same markets.

• - High regulatory hurdles and capital requirements for a bank charter create a strong barrier to entry.
• - New entrants must overcome the bank's existing 13 branch network and community brand loyalty.
• - Fintech companies pose an indirect threat by entering specific, less-regulated niches like lending or payments.
• - The need for significant capital, shown by the bank's $140.0 million in equity as of September 30, 2025, deters traditional de novo banks.

The regulatory landscape is perhaps the most formidable obstacle. Starting a new bank requires navigating a complex, multi-agency approval process, which has historically stifled new formations. While the OCC conditionally approved Erebor Bank in October 2025, that approval came with strict conditions, including enhanced scrutiny for the first three years and a minimum 12% Tier 1 leverage ratio post-opening. Richmond Mutual Bancorporation, Inc. itself reported a Tier 1 leverage ratio of 10.9% as of September 30, 2025, demonstrating the substantial capital base required to operate safely and meet regulatory expectations, which must be raised upfront by any new entrant. The OCC generally expects projected capital for a new bank to remain at or above the "well capitalized" level defined in 12 CFR 6.4(b)(1).

For a community bank like Richmond Mutual Bancorporation, Inc., the established physical footprint and local relationships present a tangible barrier. As of Q3 2025, Richmond Mutual Bancorporation, Inc. operates through a network of 13 branch locations across Indiana and Ohio, supported by $1.53 billion in total assets. While the announced merger with The Farmers Bancorp is set to expand this to 24 branches, the existing network represents established customer relationships and local market penetration that a new entrant would take years to replicate. You know how sticky community banking relationships can be; they are not easily swayed by a new name on the door.

The indirect threat from financial technology firms, or fintechs, is more about market share erosion in specific product lines than outright charter competition. Fintechs are aggressively capturing market share in areas Richmond Mutual Bancorporation, Inc. serves. For instance, in 2025, digital lending accounted for approximately 63% of personal loan origination in the U.S., and an estimated 55% of small businesses in developed regions accessed loans via fintech platforms. The overall U.S. fintech market size was valued at $95.2 Bn in 2025, showing the scale of the digital competition operating outside the traditional charter structure. This forces Richmond Mutual Bancorporation, Inc. to continuously invest in technology to compete on speed and convenience, even if the fintechs themselves do not become chartered banks.

Here's a quick look at the scale of capital and market penetration:

The capital required to launch a bank, coupled with the time and cost of regulatory compliance, means that only well-funded, highly specialized entrants-like the technology-focused Erebor Bank-are likely to attempt a charter, and even they face immediate, stringent capital targets. Finance: draft 13-week cash view by Friday.