8-K: Richmond Mutual to Acquire Farmers Bancorp in $82M All-Stock Deal

Richmond Mutual Bancorporation, Inc. announced a definitive agreement to merge with The Farmers Bancorp in an all-stock transaction valued at approximately $82 million, creating a $2.6 billion asset community bank.

Summary

• Richmond Mutual Bancorporation, Inc. (RMBI) has entered into an Agreement and Plan of Merger with The Farmers Bancorp, Frankfort, Indiana (Farmers), in an all-stock transaction.
• The merger is valued at approximately $82 million, or $44.71 per share of Farmers Bancorp common stock, based on RMBI's closing price of $13.15 per share as of November 10, 2025.
• Each outstanding share of Farmers common stock will be converted into the right to receive 3.4 shares of RMBI common stock.
• Upon consummation, Farmers shareholders are expected to own approximately 38% of the combined company, with existing RMBI shareholders owning approximately 62%.
• The transaction is intended to be tax-free for shareholders of Farmers Bancorp.
• Immediately after the merger, The Farmers Bank, a wholly owned subsidiary of Farmers, will merge with and into First Bank Richmond, a wholly owned subsidiary of RMBI.
• The combined company will be a $2.6 billion asset community bank with a network of 24 branches across Central and East Central Indiana and Western and Central Ohio.
• The merger is expected to generate approximately 35% EPS accretion for Richmond Mutual shareholders, following full realization of anticipated cost savings.
• Farmers Bancorp shareholders are expected to see approximately 27.5% dividend per share accretion.
• The combined company will retain the name Richmond Mutual Bancorporation, Inc., and the combined bank will operate under a new name to be jointly determined.
• The administrative headquarters of the combined company will be in Richmond, Indiana, and the combined bank's administrative headquarters will be in Frankfort, Indiana.
• The merger agreement was unanimously approved by the Boards of Directors of both companies and is expected to close in the second calendar quarter of 2026, subject to regulatory and shareholder approvals.

Sentiment

Score: 8

Explanation: The merger presents a strong strategic fit and compelling financial benefits for both sets of shareholders, including significant EPS and dividend accretion, improved profitability metrics, and a short tangible book value earnback period. The cultural alignment and expanded market presence are key positives, though integration risks and regulatory approvals remain standard considerations.

Positives

• Creates a premier $2.6 billion asset community bank with a network of 24 branches across key markets in Central and East Central Indiana as well as Western and Central Ohio.
• Expands the combined company's footprint into demographically accretive markets, including Frankfort and surrounding affluent counties.
• Unlocks higher lending limits and broader product offerings for customers of both companies.
• Improves trading liquidity for both companies and is expected to increase dividends for Farmers Bancorp shareholders by approximately 27.5%.
• Expected to deliver significant EPS accretion of approximately 35% for Richmond Mutual shareholders, following full realization of anticipated cost savings.
• Anticipates modest tangible book value dilution with an earnback period of approximately 2 years.
• Identified cost savings, equal to 22.5% of Farmers Bancorp's noninterest expense (approximately 10% of combined noninterest expense), are expected to drive an efficient pro forma organization.
• The combined entity will have a stronger, more liquid pro forma balance sheet and enhanced capital generation for future strategic flexibility.
• Pro forma profitability metrics, including Run-Rate ROA (~1.2%) and Run-Rate ROATCE (~18%), are projected to be at or above peer medians for Midwest banks with $1B-$4B in assets.
• The merger combines two culturally-aligned banks with a shared commitment to customers, employees, and communities, which is expected to lower integration risk.
• Directors of both Richmond Mutual and Farmers Bancorp have entered into voting agreements to support the merger, indicating strong internal alignment.

Negatives

• The transaction involves one-time, pre-tax merger expenses estimated at $12.5 million.
• There will be modest tangible book value dilution, although with a projected earnback period of approximately 2 years.
• The issuance of additional Richmond Mutual shares in connection with the merger will result in dilution for existing RMBI shareholders.
• The integration of operations, systems, personnel, and technologies post-merger presents a challenge and potential for disruption.
• Management's attention may be diverted from ongoing operations and strategic initiatives during the pendency and integration of the transaction.

Risks

• Events, changes, or circumstances could give rise to the right of either party to terminate the merger agreement.
• The merger may not be completed on the anticipated terms, within the expected timeframe, or at all.
• Failure to obtain required regulatory or shareholder approvals, or the imposition of conditions that could adversely affect the combined company or expected benefits.
• Challenges in meeting expectations regarding the timing, completion, accounting, and tax treatment of the merger.
• Anticipated cost savings, synergies, or revenue enhancements may not be realized or may take longer to achieve.
• Higher-than-expected transaction costs or unexpected events could impact financial outcomes.
• Dilution from the issuance of additional Richmond Mutual shares in connection with the merger.
• Potential litigation or other legal proceedings related to the merger.
• Restrictions during the pendency of the transaction may limit business opportunities or strategic initiatives.
• The ability to successfully integrate operations, systems, personnel, and technologies post-merger is crucial.
• Disruption to customer, employee, or vendor relationships, including key community relationships, could occur.
• Diversion of management's attention from ongoing operations and strategic initiatives.
• Lower-than-expected revenues or profitability following the merger.
• Changes in credit, capital markets, or economic, political, or regulatory conditions.
• Increased competition from banks and other financial service providers.
• Other factors detailed in Richmond Mutual's filings with the SEC could affect future results.

Future Outlook

The merger is expected to close in the second calendar quarter of 2026, with system conversion anticipated in mid-2026. The combined entity aims to leverage increased scale for higher lending limits, expanded product offerings, and investments in technology and innovation, positioning it for long-term growth and enhanced shareholder value. The transaction is anticipated to be tax-free for Farmers Bancorp shareholders, and the combined company expects to achieve significant EPS and dividend accretion.

Management Comments

• "This combination marks the beginning of a strong and promising future for our newly unified organization. We are bringing together two well-established community banks, both dedicated to delivering exceptional client experiences and helping individuals and businesses achieve their financial goals." Garry Kleer, Chairman, President and Chief Executive Officer of Richmond Mutual.
• "By joining forces, we gain the scale to offer higher lending limits, invest in technology, and deliver an even better experience for our customers. Our shared culture and commitment to community banking make this a natural fit. I look forward to working with Chris Cook and our combined team to drive growth and create long-term value for our shareholders." Garry Kleer.
• "Together, Richmond Mutual and Farmers Bancorp will have the resources to compete more effectively, expand our product offerings, and invest in technology & innovation. This partnership enhances opportunities for our employees and deepens our ability to serve customers and communities. We are excited about the future and confident this combination will deliver meaningful benefits for all stakeholders." Christopher D. Cook, President and Chief Executive Officer of Farmers Bancorp.

Industry Context

This merger represents a strategic move to create a larger, more competitive regional community bank in Central and East Central Indiana and Western and Central Ohio. The banking industry continues to see consolidation as institutions seek increased scale to invest in technology, expand product offerings, manage regulatory costs, and enhance shareholder value. The combined entity's expanded footprint and higher lending limits will allow it to better compete with larger regional and national banks while maintaining a community-focused approach, aligning with broader trends of regional bank growth through M&A.

Comparison to Industry Standards

• The pro forma Run-Rate ROA of approximately 1.2% is projected to be higher than the peer median of 1.0% for Midwest banks with $1B-$4B in assets, indicating strong asset utilization.
• The pro forma Run-Rate ROATCE of approximately 18% is projected to be significantly higher than the peer median of 13% for Midwest banks with $1B-$4B in assets, suggesting superior profitability relative to tangible common equity.
• The pro forma Price/Run-Rate EPS of 7.2x (with cost savings) is below the peer median of 9.7x, potentially indicating an attractive valuation for the combined entity.
• The pro forma Price/Tangible Book Value of 85% is below the peer median of 124%, also suggesting a potentially undervalued combined entity or a conservative valuation.
• The combined company's capital ratios are expected to remain significantly above well-capitalized levels, aligning with or exceeding industry standards for financial stability and regulatory compliance.

Management Changes

Corporate Governance

Legal Proceedings

• Neither Company nor any of its Subsidiaries is a party to any, and there are no pending or, to Company's knowledge, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against Company or any of its Subsidiaries or any of their current or former directors or executive officers in their capacities as such involving a monetary claim in excess of $100,000 or seeking injunctive or other equitable relief, or challenging the validity or propriety of any of the transactions contemplated by this Agreement.
• Neither RMBI nor any of its Subsidiaries is a party to any, and there are no pending or, to RMBI's knowledge, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against RMBI or any of its Subsidiaries or any of their current or former directors or executive officers in their capacities as such involving a monetary claim in excess of $100,000 or seeking injunctive or other equitable relief, or challenging the validity or propriety of any of the transactions contemplated by this Agreement.

Related Party Transactions

• As of the date of the agreement, there are no transactions or series of related transactions, agreements, arrangements, or understandings, nor are there any currently proposed transactions or series of related transactions, between Company or any of its Subsidiaries, on the one hand, and any current or former director or executive officer (as defined in Rule 3b-7 under the Exchange Act) of Company or any of its Subsidiaries or any person who beneficially owns (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) 5% or more of the outstanding Company Common Stock (or any of such persons immediate family members or affiliates) (other than Subsidiaries of Company), on the other hand, of the type that would be required to be reported in any Company Report pursuant to Item 404 of Regulation S-K promulgated under the Exchange Act that have not been reported on a timely basis if Company was an SEC reporting company, except as set forth in Section 3.26(a) of the Company Disclosure Schedule related to Loans.

Stakeholder Impact

• **Shareholders (Farmers Bancorp):** Will receive 3.4 shares of RMBI common stock for each share, with the transaction intended to be tax-free. They are expected to own approximately 38% of the combined company and anticipate approximately 27.5% dividend per share accretion.
• **Shareholders (Richmond Mutual):** Will own approximately 62% of the combined company and are expected to see approximately 35% EPS accretion.
• **Customers:** Will benefit from higher lending limits, broader product offerings, and continued investment in best-in-class technology and digital delivery channels, enhancing their banking experience.
• **Employees:** The partnership enhances opportunities for employees within a larger, more competitive organization. The combined management team will include executives from both companies, and a severance policy is outlined for certain terminated employees.
• **Communities:** The combined entity maintains a shared culture and commitment to investing in the local communities they serve, ensuring continued community banking focus.

Next Steps

• Richmond Mutual will prepare and file a registration statement on Form S-4 with the SEC, which will include a joint proxy statement.
• Both companies will seek required regulatory approvals from the Federal Reserve Board, FDIC, and Indiana Department of Financial Institutions (DFI).
• Shareholder approvals from both Richmond Mutual and Farmers Bancorp are required.
• Richmond Mutual will cause the shares to be issued in the merger to be authorized for listing on Nasdaq.
• The Farmers Bank will merge into First Bank Richmond immediately after the parent company merger.
• The parties will jointly determine a new name for the combined bank prior to closing.
• System integration and electronic conversion of data and business operations are planned for after the Effective Time, with full conversion expected in mid-2026.

Key Dates

Recommendation

The merger is strategically sound, creating a larger, more competitive regional bank with an expanded market presence and diversified loan portfolio. The financial projections are highly attractive, with significant EPS and dividend accretion for shareholders of both entities, a short tangible book value earnback period, and improved profitability metrics relative to industry peers. The cultural alignment and experienced combined management team mitigate integration risks. While standard regulatory and integration risks exist, the compelling financial benefits and strategic rationale make this a strong investment opportunity.

Keywords

Merger, Acquisition, Community Bank, Financial Services, Banking, Indiana, Ohio, Richmond Mutual Bancorporation, The Farmers Bancorp, RMBI, FABP, EPS Accretion, Shareholder Value, Bank Holding Company, Strategic Combination