Letter from the CEO
Michael J. Quinn - President & CEO
Rhinebeck Bancorp, Inc.
Rhinebeck Bank
I am pleased to present Rhinebeck Bancorp, Inc.’s 2024 Annual Report.
Our Rhinebeck Bank team entered 2024 with a focus on ensuring our long-term stability and success, while
continuing to serve the needs of the individuals, families, and businesses throughout the Hudson Valley and
Capital Region. As I look back at 2024, I can confidently say that while challenging at times, those goals were met
and the Bank finished the year well-positioned for future growth and success.
Our sale of $92 million of longer-term, lower-yielding securities in the second half of 2024 and subsequent
reinvestment of those funds into shorter-term, more liquid securities allows for greater balance sheet flexibility
moving forward, including providing liquidity for commercial loan growth and reducing our reliance on
wholesale funding. We took an after-tax loss of $12.6 million on this sale of securities, which was the primary
factor in the Bank reporting our first loss in over 40 years; however, we remain a strong, stable financial
institution. This restructuring of our securities portfolio was a good strategic move for the Bank that will help to
solidify our financial foundation and improve financial performance going forward.
Throughout it all, I am pleased to report that our 2024 financial performance delivered:
• Commercial loan growth of $57 million in 2024 to a balance of $574 million, an increase
of 11% over the previous year.
• A net interest margin to 3.21% in 2024 compared to 3.06% in 2023, including a Q4 net interest
margin of 3.61%.
• A Bank Tier 1 capital ratio of 11.81% at year-end.
One key component of our 2025 growth strategy is to stabilize and grow our deposit base. This will provide us
with a higher core funding base to meet the needs of our commercial and residential mortgage lending customers
as well as provide profitable growth. Our Fall 2024 rollout of three new rewards deposit accounts – High Interest
Checking, Cash Back Checking and Premier Savings – through a new partnership with Kasasa, a nationally
recognized financial technology and marketing services company, is proving to be a successful campaign for the
Bank. I expect continued success with that campaign, as well as meeting our deposit growth initiatives in 2025.
With the retirement of our Chief Financial Officer, Michael McDermott, a respected and valued colleague for over
23 years, in June 2024, it was critical for us to find someone with the experience and leadership qualities that
Michael exhibited during his career. Our selection of Kevin Nihill, a banking and financial services industry
veteran for more than 20 years, has yielded immediate dividends for the Bank.
As a community bank, our success and growth of the Bank and our ability to provide superior service to our
customers remains an obvious priority, however, our ability to support those in need in our community is
something we value as well. We were happy to continue that type of support in 2024 with donations of more than
$198,000 to 132 non-profit community service organizations in the Hudson Valley.
Our strong financial footing, coupled with our hardworking and focused team here at Rhinebeck Bank, will help
us grow in 2025 and continue to provide the superior level of service to our customers that has been our hallmark
for the past 165 years.
I thank our customers, employees, investors, and the Board of Directors for their trust, confidence, support, and
commitment to our mutual success.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2024
or
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File No. 001-38779
Rhinebeck Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Maryland
83-2117268
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification Number)
2 Jefferson Plaza, Poughkeepsie, New York
12601
(Address of Principal Executive Offices)
(Zip Code)
(845) 454-8555
(Registrant’s telephone number)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
RBKB
The NASDAQ Stock Market, LLC
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Emerging growth company
☐
Non-accelerated filer
☒
Smaller reporting company
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of March 1, 2025, there were 11,094,828 shares issued of the Registrant’s Common Stock of which 6,345,975 are owned by Rhinebeck Bancorp, MHC.
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price at the end
of the most recently completed second quarter was $28,840,250.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive proxy statement, in connection with its 2025 annual meeting of stockholders, to be filed within 120 days of December 31,
2024, are incorporated by reference into Part III of this Annual Report on Form 10-K.
(This page intentionally left blank)
i
TABLE OF CONTENTS
PART I
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Item 1A.
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Item 1B.
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Item 1C. Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Item 6.
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . 47
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Item 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . 62
Item 9A.
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Item 9B.
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 63
PART III
Item 10.
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Item 11.
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Item 13.
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . 64
Item 14.
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
PART IV
Item 15.
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Item 16.
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Signatures
ii
FORWARD LOOKING STATEMENTS
This annual report on Form 10-K contains forward-looking statements, which can be identified by the use of
words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” "intend," “predict,”
“forecast,” “improve,” “continue,” "will," "would," "should," "could," "may" and words of similar meaning. These
forward-looking statements include, but are not limited to:
•
statements of our goals, intentions and expectations;
•
statements regarding our business plans, prospects, growth and operating strategies, and financial condition
and results of operation;
•
statements regarding the quality of our loan and investment portfolios; and
•
estimates of our risks and future costs and benefits.
These forward-looking statements are based on our current beliefs and expectations and are subject to
significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.
In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and
decisions that are subject to change. Forward looking statements, by their nature, are subject to risks and uncertainties.
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:
•
general economic conditions, either nationally or in our market area, including potential recessionary
conditions or slowed economic growth caused by supply chain disruption or otherwise;
•
changes in liquidity, including the size and composition of our deposit portfolio and the percentage of
uninsured deposits in the portfolio;
•
changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the
adequacy of and methodology for calculating the allowance for credit losses;
•
our 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 our market area;
•
our ability to implement our business strategies;
•
the effect of our rating under the Community Reinvestment Act;
•
our ability to achieve the expected results of the balance sheet restructuring;
•
our ability to manage or reduce expenses;
•
competition among depository and other financial institutions;
•
inflation and changes in market interest rates that affect our margins and yields, the fair value of financial
instruments or reduce our volume of loan originations, the level of defaults, losses and prepayments on
loans we have made and make whether held in portfolio or sold in the secondary market;
iii
•
adverse changes in the securities markets;
•
changes in the determination of goodwill impairment;
•
changes in laws or government regulations or policies affecting financial institutions, including changes in
regulatory fees, Federal Deposit Insurance Corporation assessments and capital requirements, and changes
in the monetary and fiscal policies of the Board of Governors of the Federal Reserve System;
•
the imposition of tariffs or other domestic or international governmental policies;
•
negative financial impact from unfavorable regulatory penalties and/or settlements;
•
our ability to manage market risk, credit risk and operational risk;
•
our ability to enter new markets successfully and capitalize on growth opportunities;
•
our ability to successfully integrate into our operations any assets, liabilities or systems we may acquire, as
well as new management personnel or customers, and our ability to realize related revenue synergies and
cost savings within expected time frames and any goodwill charges related thereto;
•
the current or anticipated impact of military conflict, terrorism or other geopolitical events;
•
a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;
•
system failures or cybersecurity threats against our informational technology and those of our third-party
providers and vendors;
•
the failure to maintain current technologies and to successfully implement future information technology
enhancements;
•
changes in consumer spending, borrowing and savings habits;
•
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the
Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company
Accounting Oversight Board;
•
our ability to attract or retain key employees;
•
our compensation expense associated with equity allocated or awarded to our employees;
•
changes in the financial condition, results of operations or future prospects of issuers of securities that we
own; and
•
conditions relating to the Coronavirus pandemic, or other public health emergencies.
Because of these and other uncertainties, our actual future results may be materially different from the results
indicated by these forward-looking statements. Please also see “Item 1A. Risk Factors.”
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1
PART I
Item 1. Business
Rhinebeck Bancorp, Inc.
Rhinebeck Bancorp, Inc., (the “Company”) a Maryland corporation, was incorporated in August 2018. On
January 16, 2019, the Company became the holding company for Rhinebeck Bank (the “Bank”) when it completed the
reorganization of the Company and the Bank into a two-tier mutual holding company form of organization. The
Company is regulated by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and the
New York State Department of Financial Services (the “NYSDFS”). The consolidated financial results contained herein
reflect the consolidated accounts of the Company and the Bank.
At December 31, 2024, the Company had consolidated total assets of $1.26 billion, total deposits of $1.02 billion
and stockholders’ equity of $121.8 million. The Company’s executive offices are located at 2 Jefferson Plaza,
Poughkeepsie, New York 12601. The telephone number at this address is (845) 454-8555. Our website address is
www.Rhinebeckbank.com. Information on this website is not and should not be considered a part of this report.
The Company files interim, quarterly and annual reports with the Securities and Exchange Commission (the
“SEC”). The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements and
other information regarding issuers such as the Company that file electronically with the SEC. All filed SEC reports and
interim filings can also be obtained from the Bank’s website (www.Rhinebeckbank.com), on the “Investor Relations”
page, without charge from Rhinebeck Bancorp, Inc.
Rhinebeck Bancorp, MHC
Rhinebeck Bancorp, MHC, a New York-chartered non-stock corporation, is a mutual holding company that owns
57.1% of the outstanding common stock of Rhinebeck Bancorp, Inc.
Rhinebeck Bank
Rhinebeck Bank is a New York-chartered stock savings bank that was organized in 1860. The Bank provides a full
range of banking and financial services to consumer and commercial customers through its 13 branches and one
representative office located in Dutchess, Ulster and Orange counties. We also maintain a representative office in
Albany County to originate indirect automobile and commercial loans. Financial services, including investment advisory
and financial product sales, are offered through a division of the Bank doing business as Rhinebeck Asset Management
(“RAM”). The Bank’s primary business activity is accepting deposits from the general public and using those funds
together with borrowings, primarily to originate indirect automobile loans (automobile loans referred to us by
automobile dealerships), commercial real estate loans (which includes multi-family real estate loans and commercial
construction loans), commercial business loans and one- to four-family residential real estate loans, and to purchase
investment securities.
We offer a variety of deposit accounts, including savings accounts, certificates of deposit, money market accounts,
commercial and personal checking accounts and individual retirement accounts. We also offer alternative delivery
channels, including ATMs, online banking and bill pay, mobile banking with mobile deposit and bill pay, Automated
Clearing House origination, remote deposit capture and telephone banking.
The Bank is subject to regulation and examination by the NYSDFS and by the Federal Deposit Insurance
Corporation (the “FDIC”).
2
Market Area
Our primary market area encompasses Albany, Dutchess, Orange, and Ulster Counties (and their contiguous
counties), which are located in the Hudson Valley region of New York. Our retail banking offices (and the representative
offices noted above) are located in these four counties and serve the surrounding areas. The Hudson Valley region has a
diversified economy and representative industries include education, health, government, leisure and hospitality and
professional business services. We also maintain a representative office in Albany County to originate indirect
automobile and commercial loans. We view Orange and Albany Counties, which have larger populations than Dutchess
and Ulster Counties, as primary areas for growth.
Based on published statistics, the U.S. unemployment rate was 4.1%, while the New York State unemployment rate
was 4.4% as of December 31, 2024. The four counties in our primary market area each had a lower unemployment rate
than New York State (Dutchess County, 3.1%, Orange County, 3.2%, Ulster County, 3.2% and Albany County, 3.0%).
According to the New York State Department of Labor, for the twelve-month period ended December 31, 2024, the
Hudson Valley’s private sector job growth increased by 1.2%. Based on published statistics, median household income
for 2023 (the latest date for which information was available) was $97,273 in Dutchess County, $96,497 in Orange
County, $81,804 in Ulster County and $83,149 in Albany County, compared to $75,149 in the U.S. and $81,386 in New
York State as a whole. Based on published statistics, the July 2023 estimated population was 297,150 in Dutchess
County, 407,470 in Orange County, 182,333 in Ulster County and 316,659 in Albany County.
Competition
We face significant competition for deposits and loans. Our most direct competition for deposits has historically
come from the numerous financial institutions operating in our market area (including other community and commercial
banks and credit unions), many of which are significantly larger than we are and have greater resources. We also face
competition for investors’ funds from other sources such as brokerage firms, money market funds and mutual funds, as
well as securities, such as Treasury bills, offered by the Federal Government. Based on FDIC data, at June 30, 2024 (the
latest date for which information is available), we had 10.40% of the FDIC-insured deposit market share in Dutchess
County, which was 4th among the 15 institutions with offices in the county, 1.39% of the FDIC-insured deposit market
share in Ulster County, which was 14th among the 19 institutions with offices in the county, and 1.11% of the FDIC-
insured deposit market share in Orange County, which was 16th among the 23 institutions with offices in the county. In
all three counties, New York City money center banks or large regional banks have a significant presence.
Our competition for loans comes primarily from the competitors referenced above and from other financial service
providers, such as mortgage companies and mortgage brokers. Competition for loans also comes from the increasing
number of non-depository financial service companies participating in the mortgage market, such as insurance
companies, securities companies, specialty finance firms and financial technology companies. Additionally, in the
indirect auto lending space, we face competition from credit unions, captive auto finance companies, online auto lenders,
and marketplace lending platforms that connect borrowers directly with investors.
We expect competition to remain intense in the future as a result of legislative, regulatory and technological changes
and the continuing trend of consolidation in the financial services industry. Technological advances, for example, have
lowered barriers to entry, allowed banks to expand their geographic reach by providing services over the internet and
made it possible for non-depository institutions, including financial technology companies, to offer products and services
that traditionally have been provided by banks. Competition for deposits and the origination of loans could limit our
growth in the future.
We seek to meet this competition with convenient branch locations, emphasizing personalized banking and the
advantage of local decision-making in our banking businesses. Specifically, we promote and maintain relationships and
build customer loyalty within local communities by focusing our marketing and community involvement on the specific
needs of individual neighborhoods. We do not rely on any individual, group, or entity for a material portion of our
deposits.
3
Lending Activities
General.
Loans are our primary interest-earning asset. At December 31, 2024, net loans represented 77.4% of our total assets.
The allowance for credit losses is accounted for under the current expected credit loss (“CECL”) model.
Loan Portfolio Composition.
The following table sets forth the composition of the loan portfolio at the dates indicated.
At December 31,
2024
2023
Amount
Percent
Amount
Percent
(Dollars in thousands)
Residential Real Estate Loans(1)(2) . . . . . . . . . . . . . . . . . . . . . . .
$
86,651
8.89 % $
77,259
7.66 %
Commercial Real Estate Loans:
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
350,962
36.00 %
324,493
32.17 %
Multi-family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105,030
10.77 %
83,376
8.27 %
Construction(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,611
2.73 %
20,208
2.00 %
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
482,603
49.50 %
428,077
42.44 %
Commercial Loans:(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91,517
9.39 %
88,927
8.82 %
Consumer Loans:
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
295,669
30.33 %
394,245
39.09 %
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,656
1.19 %
11,990
1.19 %
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,830
0.70 %
8,095
0.80 %
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
314,155
32.22 %
414,330
41.08 %
Total loans receivable, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . .
974,926
100.00 %
1,008,593
100.00 %
Dealer Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,392
8,382
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,539)
(8,124)
Loans receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
971,779
$
1,008,851
(1)
Includes residential construction loans totaling $711,000 and $1.8 million at December 31, 2024 and 2023, respectively.
(2)
Includes loans held for sale totaling $0 and $908,000 at December 31, 2024 and 2023, respectively.
(3)
Represents the amounts distributed as of the dates indicated.
(4)
Includes $86,000 and $272,000 in U.S. Small Business Administration (“SBA”) Paycheck Participation Program (“PPP”) loans at December 31,
2024 and 2023, respectively.
Loan Portfolio Maturities. The following table sets forth certain information regarding the dollar amount of loans
that will mature in the given period. The table does not include any estimate of prepayments that significantly shorten
the average loan life and may cause actual repayment experience to differ from that shown below. Demand loans, which
are loans having no stated repayment schedule or no stated maturity, are reported as due in one year or less.
At December 31, 2024
Commercial Real Estate Loans
Consumer Loans
Residential
Real Estate Construction
Non-
Residential Multifamily Commercial
Indirect
Automobile
Home
Equity
Other
Consumer
Total
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
(In thousands)
Amounts due in:
One year or less . . . . . . . . . . . . . . . . $
106 $
26,214
$
1,807
$
22 $
28,493 $
7,059
$
9
$
511 $ 64,221
More than one year through
five years . . . . . . . . . . . . . . . . . . . . .
590
397
31,033
808
44,896 233,196
254
5,528 316,702
More than five years through
fifteen years . . . . . . . . . . . . . . . . . . .
10,288
—
206,534
79,749
17,776
55,414
3,838
791 374,390
More than 15 years . . . . . . . . . . . . . .
75,667
—
111,588
24,451
352
—
7,555
— 219,613
Total . . . . . . . . . . . . . . . . . . . . . . . . $
86,651 $
26,611
$ 350,962
$
105,030 $
91,517 $ 295,669
$ 11,656
$
6,830 $ 974,926
4
The following table sets forth the mix of fixed- and adjustable-rate loans at December 31, 2024 that are due after
December 31, 2025, based on their contractual terms to maturity.
Floating or
Fixed
Adjustable
Rates
Rates
Total
(In thousands)
Residential real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,829 $ 24,716 $ 86,545
Commercial real estate loans
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,263 335,892 349,155
Multi-family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
749 104,259 105,008
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
397
397
Commercial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,801 16,223 63,024
Consumer loans
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288,610
— 288,610
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
536 11,111 11,647
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,319
—
6,319
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 418,107 $ 492,598 $ 910,705
Indirect Automobile Loans.
We have provided indirect financing of automobile purchases since 1999. At December 31, 2024, indirect
automobile loans totaled $295.7 million, or 30.3% of our total loan portfolio. While we still plan to originate indirect
automobile loans, over the past three years and for the foreseeable future we have actively decreased our indirect
automobile portfolio by decreasing loan originations through increased pricing and more selective underwriting criteria.
We acquire our indirect automobile loans from 61 automobile dealerships located in the Hudson Valley region and 30
dealers located in the Albany area, under an arrangement where the dealer receives a flat fee for referring the loan to us,
which is known as dealer participation or dealer reserve. As of December 31, 2024, 43.4% of the aggregate principal
balance of our indirect automobile loan portfolio was for the purchase of new vehicles and 56.6%, was for used vehicles.
The weighted average original term to maturity of our indirect automobile loan portfolio at December 31, 2024 was
five years and eleven months.
Each dealer that originates automobile loans makes representations and warranties with respect to our security
interests in the related financed vehicles in a separate dealer agreement with us. These representations and warranties do
not relate to the creditworthiness of the borrowers or the collectability of the loan. The dealers are also responsible for
ensuring that our security interest in the financed vehicles is perfected. Each automobile loan requires the borrower to
keep the financed vehicle fully insured against loss or damage by fire, theft and collision. The dealer agreements require
the dealers to represent that adequate physical damage insurance (collision and comprehensive) was in effect at the time
the related loan was originated and financed by us. In addition, we have the right to “force place” insurance coverage
(supplemental insurance taken out by the Bank) if the required physical damage insurance on an automobile is not
maintained by the borrower. Nevertheless, there can be no assurance that each borrower will maintain physical damage
insurance for a financed vehicle during the entire term of an automobile loan. Vendors Single Interest Insurance, which
is included on every automobile loan originated, protects the Bank against losses for physical damage to repossessed
automobiles.
Each dealer submits loan applications directly to us, and the borrower’s creditworthiness is the most important
criterion we use in determining whether to approve the loan. Each credit application generally requires that the borrower
provide current information regarding their employment history, indebtedness, and other factors that bear on
creditworthiness. We also obtain a credit report from a major credit reporting agency summarizing the borrower’s credit
history and paying habits, including such items as open accounts, delinquent payments, bankruptcies, repossessions,
lawsuits and judgments.
5
Each borrower’s credit score is the principal factor we use in determining the appropriate interest rate on a loan. Our
underwriting procedures evaluate the credit information relative to the value of the vehicle to be financed. Our
underwriters may also verify a borrower’s employment income and/or residency and, where appropriate, verify a
borrower’s payment history directly with the borrower’s creditors. Based on these procedures, a credit decision is
considered. We generally follow the same underwriting guidelines in originating direct (non-dealer) automobile loans.
We generally finance up to the full sales price of the vehicle plus sales tax, dealer preparation fees, license fees and
title fees, plus the cost of service and warranty contracts (amounts in addition to the sales price are collectively referred
to as the “additional vehicle costs”). In addition, we also may finance the negative equity related to vehicles traded in
with a prior financing. Accordingly, the amount we finance may exceed, depending on the borrower’s credit score, in the
case of new vehicles, the aggregate of the dealer’s invoice price of the financed vehicle and the additional vehicle costs,
or in the case of a used vehicle, the aggregate of the vehicle’s value and the additional vehicle costs. The maximum
amount that can be borrowed for an automobile loan by borrowers with our lowest risk rating generally may not exceed
135% of the full sales price of a new vehicle, or the vehicle’s “wholesale” value in the case of a used vehicle. The
vehicle’s value is determined by using one of the standard reference sources for dealers of used cars. We regularly
review the quality of the loans we purchase from the dealers and periodically conduct quality control audits to ensure
compliance with our established policies and procedures.
At December 31, 2024, our automobile loans to borrowers with credit scores of 639 or less at origination totaled
$27.1 million, or 9.2% of our total indirect automobile loan portfolio. We typically do not originate these types of loans
with loan-to-value ratios greater than 100% of the sales price of the automobile or debt-to-income ratios greater than
40%.
Non-Residential Commercial Real Estate Loans.
At December 31, 2024, non-residential commercial real estate loans were $351.0 million, or 36.0%, of our total loan
portfolio. Our commercial real estate loans are generally secured by properties used for business purposes, such as office
buildings, industrial facilities and retail facilities. At December 31, 2024, $118.9 million of our commercial real estate
portfolio was owner-occupied real estate and $232.1 million was secured by income producing, non-owner occupied real
estate. At December 31, 2024, substantially all of our commercial real estate loans were secured by properties located in
our market area. However, occasionally we will originate commercial real estate loans on properties located outside our
market area based on an established relationship with a strong borrower. As of December 31, 2024, we had four loans
located outside of the state of New York totaling $17.5 million.
We originate a variety of commercial real estate loans with terms and amortization periods generally up to 25 years,
for large newly constructed commercial developments, including retail plazas and up to 20 years for almost all other
commercial properties. The interest rate on commercial real estate loans is generally adjustable and based on a margin
over an index, typically The Wall Street Journal Prime Rate or the Federal Home Loan Bank of New York Amortizing
Advance Rate. Commercial real estate loans are generally originated in amounts up to 75% of the appraised value or the
purchase price of the property securing the loan, whichever is lower. The Bank selectively offers interest rate swaps for
both commercial and multi-family real estate loans. See Note 12 to the Consolidated Financial Statements for additional
information.
In underwriting commercial real estate loans, we consider a number of factors, including the projected net cash
flows to the loan’s debt service requirement (generally requiring a minimum of 1.20x), the age and condition of the
collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or
managing similar properties. Where appropriate, we also require corporate guarantees and/or personal guarantees. We
monitor borrowers’ and guarantors’ financial information on an ongoing basis by requiring periodic financial statement
updates.
6
The following table provides information with respect to our non-residential commercial real estate loans by type at
December 31, 2024 (dollars in thousands).
December 31, 2024
Commercial real estate loans:
Number of Loans
Owner
occupied
Non-owner
occupied
Total Balance
Percent
Residential one-to-four family . . . . . . . . . . . . . . . .
73 $ 2,052 $ 13,030
$ 15,082
4.30 %
Mixed use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86 16,151 40,950
57,101
16.27 %
Auto dealer/car sales . . . . . . . . . . . . . . . . . . . . . . . .
11 19,036 16,586
35,622
10.15 %
Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41 5,931 23,760
29,691
8.46 %
Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30 6,233 61,837
68,070
19.40 %
Industrial/manufacturing/warehouse . . . . . . . . . . .
32 17,589 17,196
34,785
9.91 %
Hotel/motel/inn . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 14,679 23,267
37,946
10.81 %
Restaurant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24 13,765 4,739
18,504
5.27 %
Mobile home/park . . . . . . . . . . . . . . . . . . . . . . . . . .
3 -
2,897
2,897
0.83 %
Self-storage facility . . . . . . . . . . . . . . . . . . . . . . . . .
7 1,167 15,496
16,663
4.75 %
Other commercial real estate . . . . . . . . . . . . . . . . .
44 22,295 12,306
34,601
9.86 %
Total commercial real estate loans . . . . . . . . . . . . . .
358 118,898 232,064 $ 350,962 100.00 %
At December 31, 2024, our largest commercial real estate loan had an outstanding balance of $16.6 million and was
secured by a shopping center located in Clifton Park, New York. At December 31, 2024, this loan was performing
according to its original terms.
Commercial Business Loans.
We originate commercial business loans and lines of credit to a variety of small- and medium-sized businesses in
our market area. Our commercial business borrowers include professional organizations, family-owned businesses, and
not-for-profit organizations. These loans are generally secured by business assets and we may require support of this
collateral with liens on real property. At December 31, 2024, commercial business loans were $91.5 million, or 9.4% of
our total loan portfolio. We encourage our commercial business borrowers to maintain their primary deposit accounts
with us, many of which are non-interest-bearing, which improves our overall interest rate spread and profitability.
Our commercial business loans include term loans and revolving lines of credit. Commercial loans and lines of
credit are made with either variable or fixed rates of interest. Variable interest rates are based on a margin over an index
we select, typically The Wall Street Journal Prime Rate. Commercial business loans typically have shorter terms to
maturity and higher interest rates than commercial real estate loans, but may involve more credit risk because of the type
of collateral and our reliance primarily on the success of a borrower’s business for the repayment of the loan.
When making commercial business loans, we consider the financial history of the borrower, our lending experience
with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, and the value
of the collateral, such as accounts receivable, inventory and equipment. Depending on the collateral used to secure the
loans, commercial business loans are made in amounts up to 90% of the value of the collateral securing the loan. We
require commercial business loans extended to closely held businesses to be guaranteed by the principals, as well as
other appropriate guarantors, when personal assets are in joint names or a principal’s net worth is not sufficient to
support the loan.
Commercial business loans include participations we purchase from a single, board-approved third party in
leveraged lending transactions. Leveraged lending transactions are generally used to support a merger- or acquisition-
related transaction, to back a recapitalization of a company’s balance sheet or to refinance debt. When considering a
participation in the leveraged lending market, we will participate only in first lien senior secured term loans and lines of
credit that are more closely aligned to middle market transactions. To further minimize risk, based on our current capital
levels and loan portfolio, we have limited the total amount of leveraged loans to $1.5 million with a single obligor while
maintaining that the total of all leveraged loans cannot exceed more than 15% of our risk-based capital. We also monitor
industry and customer concentrations. As of December 31, 2024, our leverage loans amounted to $4.0 million. Except
for one loan of $159,000, all other loans were performing in compliance with their contractual terms.
7
At December 31, 2024, our largest commercial business loan had an outstanding balance of $6.1 million and was
secured by equipment. At December 31, 2024, this loan was performing according to its original terms.
Residential Mortgage and Residential Construction Loans.
Our one- to four-family residential loan portfolio consists of mortgage loans that enable borrowers to purchase or
refinance existing homes, most of which serve as the primary residence of the borrower. At December 31, 2024, one- to
four-family residential real estate loans totaled $86.7 million, or 8.9% of our total loan portfolio, and consisted of $62.0
million of fixed-rate loans and $24.7 million of adjustable-rate loans. Most of these one- to four-family residential
properties are located in our primary market area. We will consider originating one- to four-family residential real estate
loans secured by properties located outside our normal lending area on a case-by-case basis, primarily to preexisting
customers with a relationship of one year or longer, and provided the property is located in New York.
We offer fixed-rate and adjustable-rate residential mortgage loans with maturities up to 30 years. The one- to four-
family residential mortgage loans that we originate are generally underwritten according to Freddie Mac guidelines, and
we refer to loans that conform to such guidelines as “conforming loans.” Loans to be sold to other approved investors or
secondary market sources are underwritten to their specific requirements. We originate both fixed- and adjustable-rate
mortgage loans in amounts up to the maximum conforming loan limits. To a lesser extent, we also originate loans above
the conforming limits, which are referred to as “jumbo loans.” We usually underwrite jumbo loans, whether originated
or purchased, in a manner similar to conforming loans.
Historically we have sold most of the fixed-rate residential mortgage loans that we originated to reduce our interest
rate risk exposure and generate fee income. The majority of the mortgage loans that we originated were sold to Freddie
Mac on a servicing rights retained basis. We also originated State of New York Mortgage Agency loans, which were
sold on a servicing released basis. Over the past few years, however, we have retained in our portfolio more high quality
fixed-rate mortgages with terms up to 30 years. We sold $7.8 million and $4.8 million of fixed-rate residential mortgages
during the years ended December 31, 2024 and 2023, respectively. At December 31, 2024, we serviced $266.5 million
of one- to four-family residential mortgage loans for others. We generated $684,000 and $725,000 in loan servicing fee
income during the years ended December 31, 2024 and 2023, respectively.
We originate one- to four-family residential mortgage loans with loan-to-value ratios of up to 80% of the appraised
value, depending on the size of the loan. Our conforming mortgage loans may be for up to 97% of the appraised value of
the property provided the borrower obtains private mortgage insurance. Additionally, mortgage insurance is required for
all mortgage loans that have a loan-to-value ratio greater than 80%. The required coverage amount varies based on the
loan-to-value ratio and term of the loan. We only permit borrowers to purchase mortgage insurance from companies that
have been approved by Freddie Mac or Fannie Mae. We maintain wholesale broker relationships that give us a wider
range of products to better serve our existing customers and to attract new customers for our mortgage loan products.
These wholesale relationships provide us access to government-backed loan programs such as Federal Housing
Administration and Department of Veterans Affairs financing.
We do not offer “interest only” mortgage loans on one- to four-family residential properties or loans that provide for
negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed
on the loan, resulting in an increased principal balance during the life of the loan. Additionally, we do not offer
“subprime loans” (loans that are made with low down-payments to borrowers with weakened credit histories typically
characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable
repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having
less than full documentation).
We originate loans to finance the construction of one- to four-family residential properties. We also originate
rehabilitation loans, enabling the borrower to partially or totally refurbish an existing structure, which are structured as
construction loans and monitored in the same manner. At December 31, 2024, residential construction loans totaled
$711,000, or 0.8% of our residential mortgage loan portfolio. Most of these loans are secured by properties located in
our primary market area.
8
Our residential land and acquisition loans are generally structured as two-year interest-only balloon loans. The
interest rate is generally a fixed rate based on an index rate, plus a margin. Our construction-to-permanent loans are
generally structured as interest-only, one-year, fixed-rate loans during the construction phase. Construction loan-to-value
ratios for one- to four-family residential properties generally will not exceed 80% of the appraised value on a completed
basis or the cost of completion, whichever is less, during the construction phase of the mortgage. Once the construction
project is satisfactorily completed, we provide permanent financing or sell the permanent mortgage to an investor like
Freddie Mac.
Before making a commitment to fund a construction loan, we generally require an appraisal of the property by an
independent licensed appraiser. The construction phase is carefully monitored to minimize our risk. All construction
projects must be completed in accordance with approved plans and approved by the municipality in which they are
located. Loan proceeds are disbursed periodically in increments as construction progresses and as inspections by our
approved inspectors warrant.
Multi-Family Real Estate Loans.
At December 31, 2024, multi-family real estate loans totaled $105.0 million, or 10.8%, of our total loan portfolio.
Our multi-family real estate loans are generally secured by multi-unit rental properties, consisting of five to 100 rental
units, in our market area.
We originate multi-family real estate loans with terms and amortization periods of up to 30 years. The interest rates
on our multi-family real estate loans are generally adjustable based on a margin over an index. Multi-family real estate
loans are generally originated in amounts up to 75% of the appraised value or the purchase price of the property securing
the loan, whichever is lower.
In underwriting multi-family real estate loans, we consider a number of factors including the projected net cash
flows to the loan’s debt service requirement (generally requiring a minimum of 1.20x), the age and condition of the
collateral, the financial resources and income level of the borrower, and the borrower’s experience in owning or
managing similar properties. Where appropriate, we also require corporate guarantees or personal guarantees. We
monitor borrowers’ and guarantors’ financial information on an ongoing basis by requiring periodic financial statement
updates.
At December 31, 2024, our largest multi-family real estate loan had an outstanding balance of $14.1 million and
was secured by an apartment complex located in Poughkeepsie, New York. At December 31, 2024, this loan was
performing according to its original terms.
Commercial Construction and Land Development Loans.
We originate loans to finance the construction of commercial properties, multi-family projects (including one- to
four-family non-owner occupied residential properties) and professional complexes, or to acquire land for development
for these purposes. We also originate rehabilitation loans, enabling the borrower to partially or totally refurbish an
existing structure, which are structured as a construction loan and monitored in the same manner. At December 31, 2024,
commercial construction and land development loans totaled $26.6 million, or 2.7% of our total loan portfolio. All of
these loans are secured by properties located in our primary market area. We also had undrawn amounts on the
commercial construction loans totaling $24.6 million at December 31, 2024.
Our commercial construction and land development loans are generally structured as two-year interest-only balloon
loans. The interest rate is generally a variable rate based on an index rate, typically The Wall Street Journal Prime Rate
plus a margin. We generally offer commercial construction loans with a loan-to-value ratio of up to 75% of the appraised
value on a completed basis or the cost of completion, whichever is less. We offer financing to purchase land for
development with a maximum loan-to-value ratio of 50%.
9
Before making a commitment to fund a commercial construction loan, we generally require an appraisal of the
property by an independent licensed appraiser. The construction phase is carefully monitored to minimize our risk. All
construction projects must be completed in accordance with approved plans and approved by the municipality in which
they are located. Loan proceeds are disbursed periodically in increments as construction progresses and as inspections by
our approved inspectors warrant.
At December 31, 2024, our largest commercial construction and land development loan was a hotel construction
project located in Saratoga Springs, New York, and had an outstanding balance of $15.0 million with no remaining
available balance. At December 31, 2024, this loan was performing according to its original terms.
Consumer Loans.
We offer consumer loans to customers residing in our primary market area. Our consumer loans consist primarily of
indirect automobile loans as discussed above. Other consumer loans consist mostly of home equity loans, lines of credit
and direct automobile loans. At December 31, 2024, $11.7 million of our consumer loans were home equity loans and
lines of credit, and $5.7 million of our consumer loans were direct automobile loans.
Home equity loans and lines of credit are multi-purpose loans used to finance various home or personal needs,
where a one- to four-family primary or secondary residence serves as collateral. We generally originate home equity
loans and lines of credit of up to $150,000, with a maximum loan-to-value ratio of 80% (including any first lien position)
and terms of up to 20 years. Home equity lines of credit have adjustable rates of interest that are based on the prime
interest rate published in The Wall Street Journal, plus a margin, and reset monthly. Home equity lines of credit are
secured by residential real estate in a first or second lien position.
The procedures for underwriting consumer loans include assessing the applicant’s payment history on other
indebtedness, the applicant’s ability to meet existing obligations and payments on the proposed loan, and the loan-to-
value ratio. Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes
a comparison of the value of the collateral, if any, to the proposed loan amount.
Loan Underwriting Risks
Indirect Automobile and Other Consumer Loans.
Indirect automobile and other consumer loans entail greater risk than residential mortgage loans, particularly in the
case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as motor vehicles.
Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the
outstanding loan and any small remaining deficiency often does not warrant further substantial collection efforts against
a borrower. Indirect automobile and consumer loan collections depend on a borrower’s continuing financial stability, and
therefore are likely to be adversely affected by various factors, including job loss, divorce, illness or personal
bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount we can recover on such loans.
Additional risk elements associated with indirect lending include the limited personal contact with the borrower as a
result of indirect lending through non-bank channels, namely automobile dealers.
Commercial and Multi-Family Real Estate Loans.
Loans secured by commercial and multi-family real estate generally have larger balances and involve a greater
degree of risk than one- to four-family residential mortgage loans. Of primary concern in commercial and multi-family
real estate lending is the borrower’s creditworthiness and the feasibility and cash flow potential of a project. Payments
on loans secured by income properties often depend on successful operation and management of the properties. As a
result, repayment of such loans may be subject to a greater extent than residential real estate loans to adverse conditions
in the real estate market or the economy. If we foreclose on a commercial or multi-family real estate loan, the marketing
and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition,
10
vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price
concessions to offset their real or perceived economic losses for the time it takes them to return the property to
profitability. Direct costs may be required to rehabilitate or prepare the property to be marketed. Depending on the
individual circumstances, initial charge-offs and subsequent losses on commercial or multi-family real estate loans can
be unpredictable and substantial.
To monitor cash flows on income properties, we require borrowers and loan guarantors, if any, to provide financial
statements on the business operations underlying the commercial and multi-family real estate loans on an ongoing basis.
In reaching a decision whether to make a commercial or multi-family real estate loan, we consider and review a global
cash flow analysis of the borrower and consider the net operating income and profitability of the property, the
borrower’s expertise, credit history and the value of the underlying property. We generally require properties securing
these real estate loans to have debt service coverage ratios (the ratio of earnings before interest, taxes, depreciation, and
amortization before debt service to debt service) of at least 1.20x. We obtain an environment report on all commercial
real estate properties. We obtain an environmental Phase 1 report for all loans over $1.0 million or when hazardous
materials may have existed on the site, or the site may have been impacted by adjoining properties that handled
hazardous materials. We will also obtain a Phase 1 report if the initial environmental reports indicate that there may be
an environmental issue on a property. We require indemnification from our commercial real estate borrowers and/or
guarantors for potential exposure to environmental issues.
Commercial Business Loans.
Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make
repayment from his or her employment or other income, and which are secured by real property whose value tends to be
more easily ascertainable, commercial business loans have higher risk because they are made typically on the basis of
the borrower’s ability to repay a loan from the cash flows of the borrower’s business and the collateral securing these
loans may fluctuate in value. Our commercial business loans are underwritten and evaluated primarily based on the
identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. Most often,
this collateral consists of accounts receivable, inventory or equipment, or real estate. Commercial business loans to
closely held businesses are also required to be personally guaranteed by the principal(s), as well as by other appropriate
guarantors when personal assets are in joint names or if the principal’s net worth is insufficient by itself to support the
loan. The availability of funds to repay commercial business loans may depend substantially on the success of the
business itself. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and
may fluctuate in value.
Our Credit Administration Department is responsible for monitoring industry concentrations among commercial
borrowers and for reporting the industries represented by commercial borrowers to senior management on at least an
annual basis.
Adjustable-Rate Loans.
Rising interest rates may require adjustable-rate loan borrowers to make higher monthly payments that could cause
an increase in delinquencies and defaults. The marketability of the underlying property also may be adversely affected in
a high interest rate environment. In addition, although adjustable-rate loans make our assets more responsive to changes
in market interest rates, the extent of this interest rate sensitivity may be somewhat limited by the annual and lifetime
interest rate adjustment limits on residential mortgage loans.
Construction Loans.
Construction lending involves additional risks when compared to permanent residential or commercial lending
because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because
of the uncertainties inherent in estimating construction timing and costs, as well as the market value of the completed
project and the effects of governmental regulation on real property, it is relatively difficult to accurately evaluate the
total funds required to complete a project and the related loan-to-value ratio. In addition, generally during the term of a
construction loan, interest may be funded by the lender or disbursed from an interest reserve set aside from the
11
construction loan budget. These loans often involve the disbursement of substantial funds with repayment substantially
dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain
permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the
appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of
the loan upon completion of construction of the project and may incur a loss.
Our ability to originate construction loans is dependent on the strength of the housing and commercial markets in
our region. We focus our loan underwriting on the borrower’s financial strength, credit history and demonstrated ability
to produce a quality product and effectively market and manage their operations. Before making a commitment to fund a
construction loan, we generally require an appraisal of the property by an independent licensed appraiser. The
construction phase is carefully monitored to minimize our risk. All construction projects must be completed in
accordance with approved plans and approved by the municipality in which they are located. Loan proceeds are
disbursed periodically in increments as construction progresses and as inspections by our approved inspectors warrant.
Loan Originations and Sales.
Loan originations come from a variety of sources. The primary sources of loan originations are current customers,
business development by our relationship managers, walk-in traffic, automobile dealerships, referrals from customers,
and brokers.
Fixed-rate residential mortgages may be sold upon origination to limit our interest rate risk exposure and generate
fee income. Mortgage loans are usually sold to Freddie Mac on a servicing rights retained basis; however, we may sell
mortgages on a servicing released basis to free up capital, maximize profitability and protect us from interest rate risk.
Loan Approval Procedures and Authority.
Our lending activities follow written, non-discriminatory, underwriting standards and loan origination procedures
established by our Board of Directors and management. The Board of Directors has granted loan approval authority to
certain officers up to prescribed limits, depending on the officer’s experience and the type of loan. Our policies also limit
the aggregate loans to one entity that an individual officer may approve, up to prescribed limits, depending on the
officer’s experience. Loan officers are not allowed to approve loans they have originated.
Loans in excess of individual officers’ lending limits require approval of our Credit Committee, which is comprised
of our President and Chief Executive Officer (“CEO”), Chief Credit Officer, Chief Lending Officer, Senior Vice
President-Commercial Lending Team Leader, Vice President-Credit Administration, and other lending officers
appointed from time to time. The Credit Committee can approve individual loans of up to prescribed limits, depending
on the type of loan. Officers that sit on the Credit Committee must abstain from voting on loans they have originated.
Loans in excess of the Credit Committee’s loan approval authority require the approval of the Board of Directors.
Loans in excess of our internal loans-to-one borrower limitation and certain loans that involve policy exceptions also
must be approved by the Board of Directors.
Loans-to-One Borrower.
Under New York banking law, our total loans or extensions of credit to a single borrower or group of related
borrowers (“loans-to-one borrower”) cannot exceed, with specified exceptions, 15% of our capital stock, surplus fund
and undivided profits. We may lend additional amounts up to 10% of our capital stock, surplus and undivided profits if
the loans or extensions of credit are fully secured by readily-marketable collateral.
12
Pursuant to our internal policies, our internal loans-to-one borrower limitation is set at 25% of Tier 1 capital
(excluding the capital attributable to our $5.0 million of outstanding trust preferred securities), of which no more than
10% can be lent on an unsecured basis. This general standard is further restricted as follows:
•
Commercial or Multi-Family Real Estate Loans. We will not lend more than 25% of capital to any one
borrower, and no more than 15% of capital to any one project or property. We may consider exceptions for
loans of more than 15% of capital to any one project/property. In no event will we make a commercial or multi-
family real estate loan in excess of 17.5% of capital to any one project or property.
•
Commercial Business Loans. We will not lend more than 15% of capital to any one borrower, with only 10% of
capital lent on an unsecured basis under normal policy. Our Board of Directors may make exceptions to the
10% limit for unsecured credit for borrowers with strong credit profiles.
At December 31, 2024, our regulatory limit on loans-to-one borrower and our internal loans-to-one borrower limit
were $31.1 million and $24.9 million, respectively. As of December 31, 2024, we had no loans that equaled or exceeded
our internal loans-to-one borrower limit or our individual regulatory loan limit.
At December 31, 2024, our largest lending relationship consisted of 40 loans aggregating $24.7 million, which
consisted of $22.0 million secured by multiple commercial real estate properties and $2.7 million secured by equipment,
inventory and receivables. At December 31, 2024, each loan in this relationship was performing according to its original
repayment terms.
Non-Performing Loans and Problem Assets
Performance of the loan portfolio is reviewed on a regular basis by Bank management. A number of factors
regarding the borrower and loan, such as overall financial strength, collateral values and repayment ability, are
considered in deciding what actions should be taken when determining the collectability of interest for accrual purposes.
When a loan is classified as non-accrual, the accrual of interest on such a loan is discontinued. A loan is typically
classified as non-accrual when the contractual payment of principal or interest has become 90 days past due or
management has serious doubts about the further collectability of principal or interest, even though the loan is currently
performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well
secured. When a loan is placed on non-accrual status, unpaid accrued interest is fully reversed. Interest payments
received on non-accrual loans are applied against principal.
Loans are usually restored to accrual status when the obligation is brought current, has performed in accordance
with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal
and interest is no longer in doubt.
We use the accrual method of accounting for all performing loans. The accrual of interest income is generally
discontinued when the contractual payment of principal or interest has become 90 days past due or management has
serious doubts about further collectability of principal or interest, even though the loan is currently performing. When a
loan is placed on non-accrual status, unpaid interest previously credited to income is reversed. Interest received on non-
accrual loans is applied against principal. Generally, residential and consumer loans are restored to accrual status when
the obligation is brought current in accordance with the contractual terms for a reasonable period of time and ultimate
collectability of total contractual principal and interest is no longer in doubt. Commercial loans are restored to accrual
status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable
period of time and ultimate collectability of total contractual principal and interest no longer is in doubt.
In our collection efforts, we will first attempt to cure any delinquent loan. If a real estate secured loan is placed on
non-accrual status, it could be subject to transfer to other real estate owned (“OREO”) (comprised of properties acquired
by or in lieu of foreclosure), of which our credit administration department will pursue the sale of the real estate. Prior to
this transfer, the loan balance will be adjusted, if necessary, to reflect its current market value less estimated costs to sell.
Write downs of OREO that occur after the initial transfer from the loan portfolio and costs of holding the property are
13
recorded within other operating expenses, except for significant improvements, which are capitalized to the extent that
the carrying value does not exceed estimated net realizable value.
Fair values for determining the value of collateral are estimated from various sources, such as real estate appraisals,
financial statements and from any other reliable sources of available verifiable information. For loans individually
evaluated, collateral value is reduced for the estimated costs to sell. Reductions of collateral value are based on historical
loss experience, current market data, and any other verifiable source of reliable information specific to the collateral.
This analysis is inherently subjective, as it requires us to make estimates that are susceptible to revisions as more
information becomes available.
Non-Performing Loans. At December 31, 2024, $4.1 million, or 0.4% of our total loans, were non-performing
loans, which included $1.9 million of commercial real estate loans, $1.2 million of residential real estate loans, $590,000
of indirect automobile loans, $319,000 of commercial loans and $174,000 of home equity loans.
Other Real Estate Owned. Other real estate owned represents property acquired through foreclosure in partial or
full satisfaction of loans. The Company had no other real estate owned at December 31, 2024. At December 31, 2023,
the Company had $25,000 in other real estate owned.
Asset Quality. The table below sets forth the amounts and categories of our non-performing assets at the dates
indicated. We did not have any accruing loans past due 90 days or more at the dates presented.
At December 31,
2024
2023
(Dollars in thousands)
Non-accrual loans:
Residential real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,182
$
1,624
Commercial real estate loans
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,869
1,621
Commercial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
319
181
Consumer loans
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
590
631
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
174
99
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
25
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,134
$
4,181
Real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
25
Total non-performing assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,134
$
4,206
Total non-performing loans to total loans . . . . . . . . . . . . . . . . . . . . . . . . . .
0.42 %
0.41 %
Total non-performing loans to total assets . . . . . . . . . . . . . . . . . . . . . . . . . .
0.33 %
0.32 %
Total non-performing assets to total assets . . . . . . . . . . . . . . . . . . . . . . . . .
0.33 %
0.32 %
14
Classified Assets. Banking regulations and our Asset Classification Policy provide that loans and other assets
considered to be of lesser quality should be classified as “Substandard,” “Doubtful” or “Loss” assets. An asset is
considered Substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of
the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the institution
will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all of the weaknesses
inherent in those classified Substandard, with the added characteristic that the weaknesses present make collection or
liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Assets classified as Loss are those considered uncollectible and of such little value that their continuance as assets
without the establishment of a specific loss reserve is not warranted. The loan portfolio is reviewed on a regular basis to
determine whether any loans require classification in accordance with applicable regulations. Not all classified assets
constitute non-performing assets.
At December 31, 2024, the Company classified $9.0 million of loans as Substandard, Doubtful or Non-performing,
of which $6.8 million were commercial real estate loans, $1.2 million were residential loans, $300,000 were commercial
and industrial loans, $590,000 were indirect automobile loans, and $174,000 were home equity loans. At December 31,
2023, the Company classified $6.3 million of loans as Substandard, Doubtful or Non-performing, of which $3.0 million
were commercial real estate loans, $1.6 million were residential loans, $967,000 were commercial and industrial loans,
$631,000 were indirect automobile loans, $99,000 were home equity loans and $25,000 were other consumer loans.
Allowance for Credit Losses
The allowance for credit losses is an estimate of current expected credit losses based on available information
relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover
lifetime expected credit losses inherent in financial assets at the balance sheet date. The Company's methodology to
estimate the allowance for credit losses has two components: (i) a collective reserve for estimated lifetime expected
credit losses for pools of loans that share common risk characteristics and (ii) an individual reserve for loans that
do not share common risk characteristics. The measurement of expected credit losses is applicable to loans receivable
and investment securities measured at amortized cost. It also applies to off-balance sheet credit exposures such as loan
commitments and unused lines of credit. Loan losses are charged against the allowance for credit losses when the
Company believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the
allowance for credit losses. The allowance is established through a provision for credit losses that is charged against
income. The expected credit loss for unfunded loan commitments is reported on the consolidated statement of financial
condition in other liabilities. For more information on the allowance for credit losses methodology, see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations— Significant Accounting
Policies, Critical Accounting Estimates—Allowance for Credit Losses.”
Although we believe that we have established the allowance at appropriate levels, future additions may be necessary
if economic or other conditions in the future differ from the current environment. In addition, the FDIC and the NYDFS,
as an integral part of their examination processes, periodically review our allowance for credit losses. The banking
regulators may require that we recognize additions to the allowance based on their analysis and review of information
available to them at the time of their examination.
15
The following table sets forth activity in our allowance for credit losses on loans for the periods indicated.
Year Ended December 31,
2024
2023
(Dollars in thousands)
Allowance for credit losses at beginning of period . . . . . . . . . . . . . . . . . . . . . . $
8,124
$
7,943
Adoption of CECL standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
580
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,813
1,666
Charge-offs:
Residential real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Commercial real estate loans
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(291)
—
Commercial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(608)
(836)
Consumer loans
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,626)
(3,577)
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(201)
(62)
Total charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,726)
(4,475)
Recoveries:
Residential real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
52
Commercial real estate loans
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Commercial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
111
Consumer loans
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,233
2,182
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
65
Total recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,328
2,410
Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,398)
(2,065)
Allowance for credit losses at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,539
$
8,124
Allowance for credit losses to non-performing loans at end of period . . . . . .
206.56 %
194.31 %
Allowance for credit losses to total loans outstanding at end of period . . . . .
0.88 %
0.81 %
Non-performing loans to total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.42 %
0.41 %
Net charge-offs to average loans outstanding during period . . . . . . . . . . . . . .
(0.24)%
(0.21)%
During the year, our allowance for credit losses on loans increased by $415,000, or 5.1%, primarily due to updates
in prepayment assumptions and adjustments to qualitative and quantitative factors. These updates were made to reflect
higher delinquencies and increased charge-offs in our expected credit loss analysis.
The following table sets forth the ratios of net charge-offs to average loans by loan category.
Year Ended December 31,
2024
2023
Net recoveries (charge-offs) to average loans outstanding
Residential real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- %
0.08 %
Commercial real estate loans
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.09)%
- %
Commercial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.68)%
(0.85)%
Consumer loans
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.40)%
(0.32)%
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.30)%
0.03 %
Net charge-offs for the year ended December 31, 2024 totaled $2.4 million, compared to $2.1 million for the year
ended 2023. There was $291,000 charged off in non-residential commercial real estate in 2024. The decrease in net
charge-offs of commercial loans in 2024 was primarily due to one large commercial loan charge-off of $524,000 in 2024
as opposed to two large commercial loan charge-offs of $710,000 and $126,000 in 2023. Net charge-offs for indirect
16
automobiles remained relatively stable and totaled $1.4 million for both years ended December 31, 2024 and 2023.
Other consumer loans had net recoveries of $3,000 for the year ended December 31, 2023 as compared to net charge-
offs of $108,000 for the year ended December 31, 2024.
Allocation of Allowance for Credit Losses. The following table sets forth the allowance for credit losses allocated
by loan category, the allocation of the allowance for credit losses by loan segment and the percent of loan balances by
category at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of
future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
At December 31,
2024
2023
Percent of Percent of
Percent of Percent of
Allowance
Loans in
Allowance
Loans in
to Total
Category to
to Total
Category to
Amount
Allowance
Total Loans
Amount
Allowance
Total Loans
(Dollars in thousands)
Residential real estate loans . . . . . . . . . . . . . .
$
575
6.73 %
8.89 % $
346
4.26 %
7.66 %
Commercial real estate loans
Non-residential . . . . . . . . . . . . . . . . . . . . . .
2,675
31.33
36.00
2,329
28.67
32.17
Multi-family . . . . . . . . . . . . . . . . . . . . . . . .
313
3.67
10.77
387
4.76
8.27
Construction . . . . . . . . . . . . . . . . . . . . . . . .
—
—
2.73
—
—
2.00
Commercial loans . . . . . . . . . . . . . . . . . . . . .
684
8.01
9.39
606
7.46
8.82
Consumer loans
Indirect automobile . . . . . . . . . . . . . . . . . .
4,133
48.40
30.33
4,348
53.52
39.09
Home equity . . . . . . . . . . . . . . . . . . . . . . .
84
0.98
1.19
49
0.60
1.19
Other consumer . . . . . . . . . . . . . . . . . . . . .
75
0.88
0.70
59
0.73
0.80
Total allowance . . . . . . . . . . . . . . . . . . . . . . .
$
8,539
100.00 %
100.00 % $
8,124
100.00 %
100.00 %
Investment Activities
We have legal authority to invest in various types of investment securities and liquid assets, including U.S. Treasury
obligations, securities of various government-sponsored enterprises, residential mortgage-backed securities, municipal
securities, deposits at the Federal Home Loan Bank (the “FHLB”) of New York, certificates of deposit of federally
insured institutions, investment grade corporate bonds, equity securities and Small Business Investment Companies. At
December 31, 2024, our investment portfolio had a fair value of $159.9 million and consisted primarily of U.S.
Government securities, U.S. Government agency securities, including residential and collateralized mortgage-backed
securities, municipal securities and corporate bonds in the form of subordinated bank debt.
Our investment objectives are to maximize portfolio yield over the long term and manage our risk profile in a
manner consistent with liquidity needs, pledging requirements, asset/liability strategies and safety and soundness
concerns. Our Board of Directors has overall responsibility for the investment portfolio, including reviewing and
evaluating our investment policy on an annual basis. The Investment Committee of the Board of Directors, consisting of
three directors, meets at least three times annually to review our portfolio’s performance, quality and composition, and
provides reports to the full Board of Directors at the next monthly meeting of the full board following the meeting of the
Investment Committee. The Investment Committee also reviews and discusses policy changes prior to their presentation
to the full board. Our management has the overall responsibility for implementing the investment policy and supervising
our investment activities and performance. Management is also responsible for providing regular reports to the
Investment Committee. The President and CEO is responsible for the overall supervision of the investment activity. The
Chief Financial Officer is responsible for the implementation of the Bank’s investment policy and strategy. The
Controller is responsible for the accounting and reporting requirements of the policy.
There are no limits on security purchases or sales executed for cash management or the liquidity needs of the Bank.
Transactions require the approval of both the President and CEO and the Chief Financial Officer and must be reported to
the Investment Committee, which reports them to the Board of Directors.
Our policy is that, at the time of purchase, we designate a security as held to maturity, available-for-sale, or trading,
depending on our ability and intent. Securities that are available-for-sale or held for trading are reported at fair value,
17
while securities held to maturity are reported at amortized cost. Currently, all securities we hold are classified as
available-for-sale.
Federal Home Loan Bank Securities. In addition, we hold FHLB common stock to qualify for membership in the
FHLB system and to be eligible to borrow funds under the FHLB advance program. There is no market for the FHLB
common stock.
The aggregate fair value of our FHLB common stock as of December 31, 2024 was $4.0 million based on its par
value. No unrealized gains or losses have been recorded because we have determined that the par value of the common
stock represents its fair value. We owned shares of FHLB common stock at December 31, 2024 equal to what we were
required to own to maintain our membership in the FHLB system and was necessary to support the balance of our
advances. We are required to purchase stock as our outstanding advances increase and sell stock as the size of
borrowings decrease. Our stock position is reviewed and adjusted weekly by the FHLB.
Evaluation of Securities Portfolio. The Company evaluates securities in an unrealized loss position for
impairment related to credit losses on at least a quarterly basis. Securities in unrealized loss positions are first assessed as
to whether we intend to sell, or if it is more likely than not that we will be required to sell the security before recovery of
its amortized cost basis. If one of the criteria is met, the security’s amortized cost basis is written down to fair value
through current earnings. For securities that do not meet these criteria, the Company evaluates whether the decline in fair
value resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, we compare the
present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the
present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss
exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than
its amortized cost basis. No allowance for credit losses for available-for-sale securities was recorded as of December 31,
2024.
Portfolio Maturities and Yields. The following table sets forth the stated maturities and weighted average yields of
investment securities at December 31, 2024. Weighted average yields are calculated by dividing the income by
amortized cost. No tax equivalent adjustments were made in calculating the weighted average yield. Certain mortgage-
backed securities have adjustable interest rates and will reprice annually within the various maturity ranges. These
repricing schedules are not reflected in the table below. Weighted average yield calculations on investment securities
available for sale do not give effect to changes in fair value that are reflected as a component of equity.
More than One Year
More than Five Years
One Year or Less
to Five Years
to Ten Years
More than Ten Years
Total
Weighted
Weighted
Weighted
Weighted
Weighted
Amortized Average
Amortized
Average
Amortized
Average
Amortized
Average
Amortized
Fair
Average
Cost
Yield
Cost
Yield
Cost
Yield
Cost
Yield
Cost
Value
Yield
(Dollars in thousands)
Securities available-
for-sale:
U.S. Treasury
securities . . . . . . . . $ 23,890
3.54 % $
5,951
3.65 % $
—
— % $
—
— % $ 29,841 $ 29,693
3.57 %
Mortgage-backed
securities –
residential . . . . . . .
—
— %
1,865
2.36 %
2,276
2.50 % 99,807
2.98 % 103,948 93,492
2.96 %
U.S. government
and agency
obligations . . . . . . .
10,008
0.93 %
12,002
1.83 %
—
— %
—
— %
22,010 21,166
1.42 %
Municipal
securities . . . . . . . .
496
0.54 %
1,344
1.95 %
877
1.96 %
—
— %
2,717
2,493
1.70 %
Corporate bonds . . .
—
— %
1,604
7.24 %
12,450
4.00 %
—
— %
14,054 12,583
4.37 %
Other . . . . . . . . . .
—
— %
763
7.14 %
—
— %
—
— %
642
520
7.14 %
Total . . . . . . . . . $ 34,394
2.74 % $ 23,529
2.88 % $ 15,603
3.67 % $ 99,807
2.98 % $ 173,212 $ 159,947
2.98 %
Sources of Funds
General. Deposits have traditionally been our primary source of funds for our lending and investment activities.
We also use borrowings, primarily FHLB advances, and may use brokered certificates of deposit, depending on market
conditions, to supplement cash flows as needed. In addition, funds are derived from scheduled loan and investment
18
payments, investment maturities, loan sales, loan prepayments, retained earnings and income on earning assets. While
scheduled loan payments, investment maturities and income on earning assets are relatively stable sources of funds,
deposit inflows and outflows, loan prepayments and loan sales can vary widely and are influenced by prevailing interest
rates, market conditions and levels of competition.
Deposit Accounts. The substantial majority of our deposits are from depositors who reside in our primary market
area. At December 31, 2024, our deposits totaled $1.02 billion. Brokered deposits are obtained when needed to build
liquidity at favorable rates. We had no brokered deposits at December 31, 2024 or 2023. Deposits from related parties
held at the Bank totaled approximately $12.9 million at December 31, 2024.
In determining the terms of our deposit accounts, we consider the rates offered by our competition, our liquidity
needs, effects on profitability, and customer preferences and concerns. We generally review our deposit pricing on
a monthly basis and continually review our deposit mix. Our deposit pricing strategy has generally been to offer
competitive rates, while generally not providing the highest rates in the market, and to periodically offer special rates to
attract deposits of a specific type or term.
The following table sets forth the distribution of average deposit accounts, by account type, at the dates indicated.
For the Years Ended December 31,
2024
2023
Average
Average
Average
Average
Balance
Percent
Rate Paid
Balance
Percent
Rate Paid
(Dollars in thousands)
Non-interest-bearing demand accounts . . . . . . . . . . . .
$ 242,603
23.45 %
- % $ 268,103
24.74 %
- %
Interest-bearing demand accounts . . . . . . . . . . . . . . .
124,061
11.99 %
0.14 %
138,515
12.78 %
0.14 %
Money market accounts . . . . . . . . . . . . . . . . . . . . . . .
187,615
18.13 %
2.65 %
232,666
21.46 %
2.64 %
Savings accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141,189
13.65 %
0.36 %
161,812
14.93 %
0.36 %
Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . .
339,133
32.78 %
4.58 %
282,838
26.09 %
3.74 %
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,034,601
100.00 %
2.05 % $ 1,083,934
100.00 %
1.62 %
As of December 31, 2024 and 2023, approximately $278.3 million and $295.6 million, respectively, of our
deposit portfolio was uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used
for the Bank’s regulatory reporting requirements, which includes affiliate deposits and collateralized deposits.
The following table summarizes total uninsured deposits based on the same methodologies and assumptions
used for the Bank’s regulatory reporting:
Years Ended December 31,
2024
2023
(Dollars in thousands)
Uninsured deposits, per regulatory requirements . . . . . . . . . . . . . . . $
278,329 $ 295,574
Less affiliate deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,728)
(9,448)
Collateralized deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Uninsured deposits, after exclusions . . . . . . . . . . . . . . . . . . . . . . . . . $
269,601 $ 286,126
Available liquidity(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
613,696 $ 679,393
Uninsured deposits coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
227.6%
237.4%
Uninsured deposits after exclusions as a percent of total deposits . . . .
26.4%
27.8%
(1) Includes cash and cash equivalents, unencumbered securities, lines of credit and remaining borrowing capacity from the FHLB
and FRB.
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As of December 31, 2024, the aggregate amount of certificates of deposits in denominations greater than
$250,000 was $95.6 million. In addition, as of December 31, 2023, the portion of certificates of deposit in excess of the
FDIC insurance limit of $250,000 was $48.6 million. The following table sets forth the maturity of those certificates as
of December 31, 2024.
Maturity Period
Amount
(In thousands)
Three months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,820
Over three through six months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,223
Over six through twelve months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,181
Over twelve months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,367
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,591
At December 31, 2024, $288.3 million of our certificates of deposit will mature during 2025. We monitor activity
on these accounts and, based on historical experience and our current pricing strategy, we believe we will retain a
significant portion of these accounts upon maturity. However, if a substantial portion of these deposits is not retained, we
may utilize FHLB advances, brokered deposits or raise interest rates on deposits to attract new accounts, which may
result in higher levels of interest expense.
Borrowings. We primarily borrow from the Federal Home Loan Bank of New York to supplement our supply of
investable funds. The FHLB functions as a central reserve bank providing credit for its member financial institutions. As
a member, we are required to own capital stock in the FHLB and are authorized to apply for advances or loans on the
security of such stock and first mortgage loans and other assets (principally securities that are obligations of, or
guaranteed by, the United States), provided we meet certain creditworthiness standards. Advances are made under
several different programs, each having its own interest rate and range of maturities. Depending on the program,
limitations on the total amount of advances are based either on a fixed percentage of an institution’s net worth or on the
FHLB’s assessment of the institution’s creditworthiness. See “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Liquidity Management” and “Note 7 to the Consolidated Financial
Statements” for further discussion of borrowings.
Subsidiaries
In addition to the Bank, the Company has one other wholly-owned subsidiary, RSB Capital Trust I (the “Trust”). In
2005, the Trust issued $5.0 million of pooled trust preferred securities in a private placement and issued 155 shares of
common stock at $1,000 par value per share to Rhinebeck Bancorp, MHC. The Trust has no independent assets or
operations and was formed to issue trust preferred securities and invest the proceeds in an equivalent amount of junior
subordinated debentures issued by Rhinebeck Bancorp, MHC. All of the cash proceeds from the issuance of the junior
subordinated debentures by Rhinebeck Bancorp, MHC were contributed as capital to the Bank. In connection with our
reorganization in January 2019, all of the common stock of the Trust and the corresponding subordinated debentures
issued by Rhinebeck Bancorp, MHC to the Trust were transferred to Rhinebeck Bancorp, Inc. At that time, the Trust
became wholly-owned by, and the debt became an obligation of, Rhinebeck Bancorp, Inc. The trust preferred securities
mature 30 years from the date of issuance and bear interest at a rate equal to the three-month CME term Secured
Overnight Financing Rate (“SOFR”) plus 2% and a relative spread adjustment of 0.26%. The interest rate on these
securities at December 31, 2024 was 6.78%.
Personnel and Human Capital Resources
Our success is dependent on a workforce that embrace and are dedicated to our mission and culture. Our culture is
grounded in a set of core values – “ICARE,” which stands for “Integrity, Community, Accountability, Respect, and
Empathy”. In order to continue to deliver on our mission and maintain our culture, it is crucial that we attract and retain
talent who desire and have the experience to provide creative and innovative financial solutions and options for the
diverse communities we serve. Through our hiring and retention programs we aim to create an inclusive workforce with
diversified backgrounds and experiences. We strive to maintain a safe and healthy workplace, with opportunities for our
employees to grow and develop in their careers, supported by advantageous compensation, benefits, health, and welfare
programs.
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As part of our compensation philosophy, we offer market competitive total rewards programs for our employees in
order to attract and retain superior talent. These programs include annual bonus opportunities, an Employee Stock
Ownership Plan, an equity incentive plan, a matched 401(k) Plan, healthcare and insurance benefits, health savings and
flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, adoption
assistance, education reimbursement program, and employee assistance programs.
We encourage and support the growth and development of our employees and, wherever possible, seek to fill
positions by promotion and transfer from within the organization. Additionally, all of our employees are expected to
display and encourage honest, ethical, and respectful conduct in the workplace. Our employees must adhere to our Code
of Business Conduct and Ethics that sets standards for appropriate behavior and includes periodic training on preventing,
identifying, reporting, and stopping discrimination of any kind.
Continual learning and career development is advanced through ongoing performance and development
conversations with employees, internally developed training programs, customized corporate training engagements and
educational reimbursement programs. Reimbursement is available to employees enrolled in pre-approved degree or
certification programs at accredited institutions that teach skills or knowledge relevant to our business, in compliance
with Section 127 of the Internal Revenue Code, and for seminars, conferences, and other training events employees
attend in connection with their job duties.
Employee retention helps us operate efficiently and achieve our business objectives. We believe our commitment to
demonstrating our core values, actively prioritizing concern for our employees’ well-being, supporting our employees’
career goals, offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing
employees.
As of December 31, 2024, we had 157 full-time employees and 11 part-time employees. Approximately 45% of our
employees are employed at our banking center and loan production offices, and another 55% are employed at our
corporate headquarters. We believe our relationship with our employees to be generally good. None of our employees
are represented by a collective bargaining agreement.
As of December 31, 2024, approximately 61% of our current workforce was female and 39% male. Our average
tenure is seven years and eight months.
The safety, health and wellness of our employees is a top priority. We promote the health and wellness of our
employees by strongly encouraging work-life balance, offering flexible work schedules, allowing remote work options,
keeping the employee portion of health care premiums to a minimum and sponsoring various wellness programs.
Information about our Executive Officers
The following listing sets forth the name, principal position, recent business experience and age (as of December 31,
2024) of each executive officer:
Michael J. Quinn is President and Chief Executive Officer (“CEO”) of Rhinebeck Bank. He was appointed as CEO
in 2004 and has been a member of the Board of Directors since 2001 when he was President and Chief Operating
Officer. He began his career at Rhinebeck Bank in 1984 and has held various positions including Branch Manager,
Treasurer, Senior Lending Officer and President and Chief Operating Officer before being named as President and CEO
in 2004. On March 21, 2025, Mr. Quinn advised Rhinebeck Bancorp, Inc., Rhinebeck Bank, and Rhinebeck Bancorp,
MHC, that he intended to retire: (1) as a Trustee of Rhinebeck Bancorp, MHC, and as a Director of Rhinebeck Bancorp,
Inc. and Rhinebeck Bank; and (2) from his positions as Chief Executive Officer and President of Rhinebeck Bancorp,
Inc., Rhinebeck Bank, and Rhinebeck Bancorp, MHC. Mr. Quinn will remain in his roles as a director, trustee,
President and Chief Executive Officer until the earlier of the end of the year or until a successor is found to ensure an
orderly transition. Age 63.
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Jamie J. Bloom is the Chief Operating Officer at Rhinebeck Bank. She has over 30 years of financial services
experience. She began her banking career at Rhinebeck Bank in 1994 as the Vice President of Sales. Age 58.
Kevin Nihill became the Chief Financial Officer and Treasurer of Rhinebeck Bank in July 2024. Prior to joining
the Bank, Mr. Nihill served as Executive Vice President and Chief Financial Officer of St. Mary’s Bank, Manchester,
New Hampshire beginning in 2021. Prior to joining St. Mary’s Bank, Mr. Nihill served as Senior Vice President,
Treasurer of Berkshire Bank, Pittsfield, Massachusetts. Mr. Nihill is a Chartered Financial Analyst. Age 49.
James T. McCardle III joined the Bank in 2001 and is currently the Chief Credit Officer (“CCO”) of Rhinebeck
Bank, a position he was appointed to in 2018. Prior to being named CCO, Mr. McCardle was the Chief Lending Officer
for seven years. He has held various titles since joining the Bank including VP, Commercial Lending, SVP Commercial
Lending and SVP and Senior Lending Officer. Age 59.
Philip Bronzi joined the Bank in 2012 as the Vice President of Lending. He became the Senior Vice President of
Lending in 2018 and was named Chief Lending Officer in 2021. His career expands over 20 years in commercial
lending with various banks in the Hudson Valley. Age 49.
Karen Morgan-D’Amelio, Esq. is the Chief Risk Officer and General Counsel for Rhinebeck Bank and a member
of its executive leadership team. She was appointed to these positions in 2014. Prior to joining the Bank, Ms. Morgan-
D’Amelio worked in both private practice and held managing attorney roles and leadership roles in financial institutions
such as The Dime Savings Bank of NY, FSB, Washington Mutual and J.P. Morgan Chase, and was a Deputy County
Attorney for Nassau County, New York. Age 54.
Timmian C. Massie joined Rhinebeck Bank in October 2020 as Chief Marketing/Public Affairs Officer. He
previously served as Senior Vice President for Marketing, Public Affairs and Government Relations at Nuvance Health
and its predecessor, Health Quest Systems, Inc. He previously served in senior positions in healthcare, utilities,
government and higher education, where he was also an adjunct professor. Age 66. Mr. Massie retired in 2025.
Mark Malone joined Rhinebeck Bank in 2012 and was appointed Chief Retail Officer in 2023. Throughout his 20
years of banking and financial services experience, he has held various leadership roles, most recently serving as Senior
Vice President of Retail Banking. Age 43.
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SUPERVISION AND REGULATION
General
As a New York-chartered savings bank, Rhinebeck Bank is subject to comprehensive regulation by the NYSDFS, as
its chartering agency, and by the FDIC, as its primary federal regulator and its deposit insurer. Rhinebeck Bank is a
member of the FHLB of New York and its deposits are insured up to applicable limits by the FDIC. Rhinebeck Bank is
required to file reports with, and is periodically examined by, the FDIC and the NYSDFS concerning its activities and
financial condition and must obtain regulatory approvals before entering into certain transactions, including mergers
with or acquisitions of other financial institutions. This regulatory structure is intended primarily for the protection of the
Deposit Insurance Fund (“DIF”) and depositors. The regulatory structure also gives the regulatory authorities extensive
discretion in connection with their supervisory and enforcement activities and examination policies, including policies
regarding the classifying of assets and establishing an adequate Allowance for credit losses for regulatory purposes.
As a New York-chartered mutual holding company, Rhinebeck Bancorp, MHC is regulated and subject to
examination by the NYSDFS and the Federal Reserve Board. As a bank holding company, Rhinebeck Bancorp, Inc. is
required to comply with the rules and regulations of the Federal Reserve Board and the NYSDFS. They are required to
file certain reports with the Federal Reserve Board and are subject to examination by and the enforcement authority of
the Federal Reserve Board and the NYSDFS. Rhinebeck Bancorp, Inc. also is subject to the rules and regulations of the
SEC under the federal securities laws.
Set forth below is a brief description of material regulatory requirements that are applicable to Rhinebeck
Bancorp, Inc., Rhinebeck Bancorp, MHC and Rhinebeck Bank. The description is limited to certain material aspects of
certain statutes and regulations that are addressed, and is not intended to be a complete list or description of such statutes
and regulations and their effects on Rhinebeck Bancorp, Inc., Rhinebeck Bancorp, MHC and Rhinebeck Bank.
New York Banking Laws and Supervision
Supervision and Enforcement Authority. Rhinebeck Bank, as a New York savings bank, is regulated and
supervised by the NYSDFS. The NYSDFS is required to regularly examine each state-chartered bank. The approval of
the NYSDFS is required to establish or close branches, to merge with another bank, to issue stock and to undertake
many other activities. Any New York savings bank that does not operate according to the regulations, policies and
directives of the NYSDFS may be subject to enforcement action for non-compliance, including seizure of the property
and business of the savings bank and suspension or revocation of its charter. NYSDFS may take a variety of
enforcement actions to address non-compliance with applicable law or engagement in prohibited practices.
The powers that New York-chartered savings banks can exercise under these laws include the following:
Lending Activities. A New York-chartered savings bank may make a wide variety of mortgage loans including
fixed-rate loans, adjustable-rate loans, participation loans, construction and development loans, condominium and co-
operative loans, second mortgage loans and other types of loans that may be made according to applicable regulations.
Commercial loans may be made to corporations and other commercial enterprises with or without security. Consumer
and personal loans may also be made with or without security.
Investment Activities. In general, the Bank may invest in certain types of debt securities (including certain
corporate debt securities, and obligations of federal, state, and local governments and agencies thereof), certain types of
corporate equity securities, and certain other assets. However, this investment authority is subject to restrictions under
federal law. See “— Federal Bank Regulation — Investment Activities” for such federal restrictions.
Dividends. Under New York banking law, the Bank may declare and pay dividends from its net profits, unless there
is an impairment of capital. Additionally, the approval of the NYSDFS is required if the total of all dividends declared in
a calendar year would exceed the total of its net profits for that year combined with its retained net profits of the
preceding two years. The term “net profits” is generally defined to mean earnings from current operations, subject to
certain adjustments provided for under applicable law.
23
Loans to Directors and Executive Officers. Under applicable NYSDFS regulations (which are substantially
similar to applicable federal banking regulations), Rhinebeck Bank generally may not make a loan or other extension of
credit to any of its executive officers or directors unless the loan or other extension of credit (1) is made on terms,
including interest rate and collateral, that are not more favorable to the executive officer or director than those
customarily offered by the Bank to persons who are not executive officers or directors and who are not employed by the
Bank, and (2) does not involve more than the normal risk of repayment or present other unfavorable features. Depending
on the size of the loan or other extension of credit, prior approval of the Bank’s Board of Directors (with the interested
party, if a director, abstaining from participating directly or indirectly in the voting) may be required.
Federal Bank Regulation
Supervision and Enforcement Authority. Rhinebeck Bank is subject to extensive regulation, examination and
supervision by the FDIC as its primary federal regulator and the insurer of its deposits.
The Bank must file reports with the FDIC concerning its activities and financial condition in addition to obtaining
regulatory approvals before entering into certain transactions such as mergers with, or acquisitions of, other financial
institutions. There are periodic examinations by the FDIC to evaluate Rhinebeck Bank’s safety and soundness and
compliance with various regulatory requirements.
The regulatory structure also gives the FDIC extensive discretion in connection with its supervisory and
enforcement activities and examination policies, including policies with respect to the classification of assets and the
establishment of an adequate allowance for credit losses for regulatory purposes. The enforcement authority includes,
among other things, the ability to assess civil money penalties, issue cease and desist orders and remove directors and
officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations,
breaches of fiduciary duty and unsafe or unsound practices. The FDIC may also appoint itself as conservator or receiver
for an insured bank under specified circumstances, including: (1) insolvency; (2) substantial dissipation of assets or
earnings through violations of law or unsafe or unsound practices; (3) existence of an unsafe or unsound condition to
transact business; (4) insufficient capital; or (5) the incurrence of losses that will deplete substantially all of the
institution’s capital with no reasonable prospect of replenishment without federal assistance.
Capital Requirements. Under FDIC regulations, Rhinebeck Bank is subject to a comprehensive capital framework
for U.S. banking organizations that was effective January 2015 (the Basel III capital rules), subject to phase-in periods
for certain components and other provisions.
The capital standards require the maintenance of common equity Tier 1 capital, Tier 1 capital and total capital to
risk-weighted assets of at least 4.5%, 6% and 8%, respectively, and a leverage ratio of at least 4% Tier 1 capital.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions
and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer”
consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its
minimum risk-based capital requirements.
Regulatory relief legislation enacted in May 2018 required the federal banking agencies, including the FDIC, to
establish for institutions with assets of less than $10 billion an elective “community bank leverage ratio” (the ratio of a
bank’s tangible equity capital to average total consolidated assets) of between 8 to 10%. A “qualifying community bank”
with capital exceeding the specified requirement that opts into the alternative framework is considered compliant with all
applicable regulatory capital and leverage requirements and deemed “well capitalized” for prompt corrective action
purposes, discussed below. A final rule was issued in November 2019 establishing the community bank leverage ratio at
9% Tier 1 capital to average total consolidated assets. The community bank leverage ratio option became effective
January 1, 2020. Management has chosen not to utilize the community bank leverage ratio.
At December 31, 2024, Rhinebeck Bank exceeded all of its capital requirements.
24
The FDIC also has authority to establish individual minimum capital requirements in appropriate cases upon
determination that an institution’s capital level is, or is likely to become, inadequate in light of the particular
circumstances.
Standards for Safety and Soundness. As required by statute, the federal banking agencies have adopted final
regulations and Interagency Guidelines Establishing Standards for Safety and Soundness. The guidelines set forth the
safety and soundness standards the federal banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired. The guidelines address internal controls and information systems, internal
audit systems, credit underwriting, loan documentation, interest rate exposure, asset growth, asset quality, earnings and
compensation, fees and benefits. The agencies have also established standards for safeguarding customer information. If
the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the
guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with
the standard.
Investment Activities. All state-chartered savings banks insured by the FDIC are generally limited in their
investment activities to principal and equity investments of the type and in the amount authorized for national banks,
notwithstanding state law, subject to certain exceptions. For example, state-chartered banks may, with FDIC approval,
continue to exercise state authority to invest in common or preferred stocks listed on a national securities exchange or
the Nasdaq Global Market and to invest in the shares of an investment company registered under the Investment
Company Act of 1940. The maximum permissible investment is 100% of Tier 1 capital, as specified by the FDIC’s
regulations, or the maximum amount permitted by New York law, whichever is less.
In addition, the FDIC is authorized to permit state-chartered banks and savings banks to engage in state-authorized
activities or investments not permissible for national banks (other than non-subsidiary equity investments) if they meet
all applicable capital requirements and it is determined that such activities or investments do not pose a significant risk to
the DIF. The FDIC has adopted procedures for institutions seeking approval to engage in such activities or investments.
In addition, a state nonmember bank may control a subsidiary that engages in activities as principal that would only be
permitted for a national bank to conduct in a “financial subsidiary” if the bank meets specified conditions and deducts its
investment in the subsidiary for regulatory capital purposes.
Prompt Corrective Regulatory Action. Federal law requires, among other things, that federal bank regulators take
“prompt corrective action” with respect to banks that do not meet minimum capital requirements. For these purposes,
federal law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized.
The FDIC has adopted regulations to implement the prompt corrective action legislation. An institution is
considered “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio
of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 capital ratio of 6.5% or greater. An
institution is considered “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-
based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 capital ratio of
4.5% or greater. An institution is considered “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%,
a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 capital
ratio of less than 4.5%. An institution is considered “significantly undercapitalized” if it has a total risk-based capital
ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common
equity Tier 1 capital ratio of less than 3.0%. An institution is considered “critically undercapitalized” if it has a ratio of
tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%. At December 31, 2024,
Rhinebeck Bank was classified as a “well capitalized” institution.
25
At each successive lower capital category, an insured depository institution is subject to more restrictions and
prohibitions, including restrictions on growth, interest rates paid on deposits, payment of dividends, and acceptance of
brokered deposits. Furthermore, if an insured depository institution is classified in one of the undercapitalized categories,
it is required to submit a capital restoration plan to the appropriate federal banking agency, and the institution’s holding
company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classified as well-
capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital
category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or
unsound condition, or an unsafe or unsound practice, warrants such treatment. An undercapitalized bank’s compliance
with a capital restoration plan is required to be guaranteed by any company that controls the undercapitalized institution
in an amount equal to the lesser of 5.0% of the institution’s total assets when deemed undercapitalized or the amount
necessary to achieve the status of adequately capitalized. If an “undercapitalized” bank fails to submit an acceptable
capital restoration plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks
must comply with one or more of a number of additional restrictions, including an order by the FDIC to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total assets, cease receipt of deposits from
correspondent banks or dismiss directors or officers, and restrictions on interest rates paid on deposits, compensation of
executive officers and capital distributions by the parent holding company. “Critically undercapitalized” institutions are
subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator
within 270 days after it obtains such status.
Transactions with Affiliates
Transactions between banks and their affiliates are governed by federal law. Generally, Section 23A of the Federal
Reserve Act and the Federal Reserve Board’s Regulation W, as made applicable to the Bank by the Federal Deposit
Insurance Act, limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one
affiliate to an amount equal to 10.0% of the bank’s capital stock and surplus, and with all transactions with all affiliates
to an amount equal to 20.0% of the bank’s capital stock and surplus. The term “covered transaction” includes making
loans to, purchasing assets from, and issuing guarantees to, an affiliate, and other similar transactions. Loans or other
extensions of credit by a bank to an affiliate are required to be collateralized according to the requirements set forth in
Section 23A of the Federal Reserve Act and Regulation W. Section 23B of the Federal Reserve Act and Regulation W
apply to “covered transactions” as well as to certain other transactions with affiliates, including a bank’s provision of
services and selling of assets to affiliates, and require that all such transactions be on terms substantially the same, or at
least as favorable, to the institution or subsidiary as those provided to a non-affiliate.
Loans to Insiders. Sections 22(h) and (g) of the Federal Reserve Act and the Federal Reserve Board’s Regulation O,
as made applicable to the Bank by the Federal Deposit Insurance Act and FDIC regulation, place restrictions on loans to
a bank’s and its affiliates’ insiders, i.e., executive officers, directors and principal stockholders and those persons’ related
interests. Under Section 22(h) of the Federal Reserve Act and Regulation O, loans to a director, an executive officer and
to a greater than 10.0% stockholder of a financial institution, and their related interests, together with all other
outstanding loans to such persons and their related interests, may not exceed specified limits. Section 22(h) of the
Federal Reserve Act also requires that loans to directors, executive officers and principal stockholders be made on terms
substantially the same as offered in comparable transactions to other unaffiliated persons, and also requires prior
approval by a majority of the board of directors for certain loans. In addition, the aggregate amount of extensions of
credit by a financial institution to insiders cannot exceed the institution’s unimpaired capital and unimpaired surplus.
Section 22(g) of the Federal Reserve Act and Regulation O place additional restrictions on loans to executive officers.
Insurance of Accounts and Regulation by the Federal Deposit Insurance Corporation. Deposit accounts in the
Bank are insured by the FDIC’s DIF, generally up to a maximum of $250,000 per separately insured depositor per
account ownership category.
The FDIC imposes an assessment for deposit insurance on all depository institutions. Under the FDIC’s risk-based
assessment system, insured institutions deemed less risky of failure pay lower assessments. Assessment rates (inclusive
of possible adjustments) for most banks with less than $10 billion of assets are based on a formula using financial data
and supervisory ratings, and currently range from 2.5 to 32 basis points of each institution’s total assets less tangible
capital.
26
The FDIC may adjust its risk-based assessment system in the future, except that no adjustment can be made without
notice and comment rulemaking. No institution may pay a dividend if in default of the federal deposit insurance
assessment.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or
unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law,
regulation, order or condition imposed by the FDIC. The Bank does not believe that it is taking or is subject to any
action, condition or violation that could lead to termination of its deposit insurance.
The USA PATRIOT Act. The USA PATRIOT Act of 2001 gave the federal government powers to address terrorist
threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and
broadened anti-money laundering requirements. The USA PATRIOT Act also required the federal banking agencies to
take into consideration the effectiveness of controls designed to combat money laundering activities in determining
whether to approve a merger or other acquisition application. Accordingly, if we engage in a merger or other acquisition,
our controls designed to combat money laundering would be considered as part of the application process. We have
established policies, procedures and systems designed to comply with the USA PATRIOT Act and other anti-money
laundering and anti-terrorist financing statutes and their implementing regulations.
Regulation of Brokered Deposits. Section 29 of the Federal Deposit Insurance Act establishes, among other things,
a general prohibition on the acceptance by any insured depository institution that is not well capitalized of any deposit
obtained, directly or indirectly, by or through any deposit broker. This statutory prohibition is further implemented
through the regulations of the FDIC and, historically, numerous published and unpublished FDIC staff interpretations of
the statute and the FDIC’s regulation.
On December 15, 2020, the FDIC adopted a final rule substantially amending its brokered deposits regulation. The
final rule sought to clarify and modernize the FDIC’s existing regulatory framework for brokered deposits. Notable
aspects of the rule include: (1) the establishment of bright-line standards for determining whether an entity meets the
statutory definition of deposit broker; (2) the identification of a number of business relationships in which the agent or
nominee of the depositor is not deemed to be a "deposit broker" because the primary purpose of the agent or nominee is
not the placement of funds with depository institutions; (3) the establishment of a more transparent application process
for entities that seek to rely upon a “primary purpose” exception, but do not qualify as one of the enumerated business
relationships to which the exception is deemed to apply; and (4) the clarification that third parties that have an exclusive
deposit-placement arrangement with only one bank is not considered a deposit broker.
The final rule took effect on April 1, 2021; however, full compliance with the final rule was not required until
January 1, 2022. Under the amended brokered deposits regulation, the range of activities viewed as deposit brokerage
has been modified, which could have an impact on the Bank’s deposit premiums, capital and liquidity risk management
planning and regulatory monitoring and reporting obligations.
FDIC Improvement Act (“FDICIA”). Under FDICIA, an institution with over $1 billion in assets is subject to
more vigorous audit requirements. Part 363 of the FDIC’s regulations, which implement FDICIA, requires an internal
control over financial reporting integrated audit by independent auditors. The Bank complied with all Part 363
requirements in 2023 and 2024.
Privacy Regulations. Cybersecurity has become a focus of federal and state regulators. The federal banking
agencies have adopted regulations for consumer privacy protection that require financial institutions to adopt procedures
to protect customers and their “non-public personal information.” Federal law and regulations generally require that
Rhinebeck Bank disclose its privacy policy, including identifying with whom it shares a customer’s “non-public
personal information,” to customers at the time of establishing the customer relationship and, subject to certain
exceptions, annually thereafter. In addition, Rhinebeck Bank is required to provide its customers with the ability to “opt-
out” of having their non-public personal information shared with unaffiliated third parties and to not disclose account
numbers or access codes to non-affiliated third parties for marketing purposes.
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Effective March 1, 2017, NYSDFS regulations required financial institutions including Rhinebeck Bank, to, among
other things: (i) establish and maintain a cyber security program designed to ensure the confidentiality, integrity and
availability of their information systems; (ii) implement and maintain a written cybersecurity policy setting forth policies
and procedures for the protection of their information systems and non-public information; and (iii) designate a Chief
Information Security Officer. In November 2023, NYSDFS amended these regulations to include heightened governance
requirements and to expand the breadth and depth of required policies and procedures, among other things.
Community Reinvestment Act. Under the Community Reinvestment Act (“CRA”), as implemented by the FDIC, a
state non-member bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help
meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions, nor does it limit an institution’s discretion
to develop the types of products and services that it believes are best suited to its particular community, consistent with
the CRA. The CRA requires the FDIC, in connection with its examination of each state non-member bank, to assess the
institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of
certain applications by the institution, including applications to establish branches and acquire other financial
institutions. The CRA and its current implementing regulations require the FDIC to provide a written evaluation of an
institution’s CRA performance utilizing a four-tiered descriptive rating system. Rhinebeck Bank’s latest FDIC CRA
rating was “Needs to Improve.” On October 24, 2023, the FDIC and the other federal banking agencies issued a final
rule to strengthen and modernize the CRA regulations. Under the final rule, banks with assets of at least $600 million as
of December 31 in both of the prior two calendar years and less than $2 billion as of December 31 in either of the prior
two calendar years will be an “intermediate bank.” The agencies will evaluate intermediate banks under the Retail
Lending Test and either the current community development test, referred to in the final rule as the Intermediate Bank
Community Development Test, or, at the bank’s option, the Community Development Financing Test. Under the
revised regulations, the applicability date for the majority of the provisions is January 1, 2026, and additional
requirements will be applicable under the regulations on January 1, 2027. On March 29, 2024, a federal court in the
Northern District of Texas issued a preliminary injunction of the new CRA regulations, enjoining the federal banking
agencies from enforcing the regulations against the plaintiff bank industry trade groups, and extending the regulations’
implementation dates day-for-day for each day the injunction is in place.
New York has its own statutory counterpart to the CRA, which is applicable to Rhinebeck Bank. New York law
requires the NYSDFS to consider a bank’s record of performance under New York law in considering any application by
the bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or
acquire the assets and assume the liabilities of any other banking institution. Rhinebeck Bank’s most recent rating under
New York’s community reinvestment law was “Satisfactory.”
Consumer Protection and Fair Lending Regulations. Rhinebeck Bank is subject to a variety of federal and New
York statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.
These statutes and regulations provide for a range of enforcement actions for non-compliance with their terms, including
imposition of administrative fines and remedial orders, and referral to the Attorney General for prosecution of a civil
action for actual and punitive damages and injunctive relief. Certain of these statutes authorize private individual and
class action lawsuits and the award of actual, statutory and punitive damages and attorneys’ fees for certain types of
violations. New York’s Attorney General and NYSDFS have vigorously enforced fair lending and other consumer
protection laws. Federal laws also prohibit unfair, deceptive or abusive acts practices against consumers, which can be
enforced against the Bank by the FDIC and state Attorneys General.
Holding Company Regulation
Federal Holding Company Regulation. Rhinebeck Bancorp, MHC and Rhinebeck Bancorp, Inc. are registered as
bank holding companies with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended,
and subject to its regulations, examinations, supervision and reporting requirements applicable to bank holding
companies. In addition, the Federal Reserve Board has enforcement authority over the Company and Rhinebeck
Bancorp, MHC and their non-savings bank subsidiaries. Among other things, this authority permits the Federal Reserve
Board to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings bank.
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A bank holding company is generally prohibited from engaging in non-banking activities, or acquiring direct or
indirect control of more than 5% of the voting securities of any company engaged in non-banking activities. One of the
principal exceptions to this prohibition is for activities the Federal Reserve Board determines to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the
Federal Reserve Board has determined by regulation to be so closely related to banking are: (1) making or servicing
loans; (2) performing certain data processing services; (3) providing discount brokerage services; (4) acting as fiduciary,
investment or financial advisor; (5) leasing personal or real property; (6) making investments in corporations or projects
designed primarily to promote community welfare; and (7) acquiring a savings and loan association whose direct and
indirect activities are limited to those permitted for bank holding companies. A bank holding company that meets certain
specified criteria may elect to be regulated as a “financial holding company” and thereby engage in a broader array of
nonbank financial activities than those generally permitted for bank holding companies. Neither Rhinebeck Bancorp,
MHC nor the Company have elected financial holding company status.
Capital. Federal law required the Federal Reserve Board to establish for all bank holding companies minimum
consolidated capital requirements that are as stringent as those required for the insured depository subsidiaries. Pursuant
to recent federal regulatory relief legislation, bank holding companies with less than $3.0 billion in consolidated assets,
including Rhinebeck Bancorp, MHC and Rhinebeck Bancorp, Inc., are not subject to the holding company capital
requirements unless otherwise advised by the Federal Reserve Board.
Dividends and Stock Repurchases. A bank holding company is generally required to give the Federal Reserve
Board prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration
for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions
during the preceding 12 months, is equal to 10% or more of the holding company’s consolidated net worth. The Federal
Reserve Board may disapprove such a purchase or redemption if it determines that the proposal would constitute an
unsafe and unsound practice, or would violate any law, regulation, Federal Reserve Board order or directive, or any
condition imposed by, or written agreement with, the Federal Reserve Board. There is an exception to this approval
requirement for well-capitalized bank holding companies that meet certain other conditions.
The Federal Reserve Board has issued a policy statement regarding capital distributions, including dividends, by
bank holding companies. In general, the policies provide that dividends should be paid only out of current earnings and
only if the prospective rate of earnings retention by the bank holding company appears consistent with the organization’s
capital needs, asset quality and overall financial condition. The policies also require that a bank holding company serve
as a source of financial strength to its subsidiary banks by standing ready to use available resources to provide adequate
capital funds to those banks during periods of financial stress or adversity, and by maintaining the financial flexibility
and capital-raising capacity to obtain additional resources for assisting its subsidiary banks where necessary.
Additionally, under the prompt corrective action laws, the ability of a bank holding company to pay dividends may be
restricted if a subsidiary bank becomes undercapitalized. Federal Reserve Board supervisory guidance indicates that
bank holding companies should provide prior notice of proposed dividends or stock repurchases under certain specified
circumstances. The purpose of such notice is to provide the Federal Reserve Board with an opportunity for supervisory
review of, and possible objection to, the proposal. These regulatory policies could affect the ability of Rhinebeck
Bancorp, Inc. to pay dividends, engage in stock repurchases, or otherwise engage in capital distributions.
Waivers of Dividends by Rhinebeck Bancorp, MHC. Rhinebeck Bancorp, Inc. has the authority to pay dividends
on its common stock to public stockholders. If it does, it is also required to pay the same dividends per share to
Rhinebeck Bancorp, MHC, unless Rhinebeck Bancorp, MHC elects to waive the receipt of dividends. Rhinebeck
Bancorp, MHC must receive the prior approval of the Federal Reserve Board before it may waive the receipt of any
dividends from Rhinebeck Bancorp, Inc., and current Federal Reserve Board policy prohibits any mutual holding
company that is regulated as a bank holding company, such as Rhinebeck Bancorp, MHC, from waiving the receipt of
dividends paid by its subsidiary mid-tier stock holding company.
Because of the foregoing Federal Reserve Board restrictions on the ability of a mutual holding company, such as
Rhinebeck Bancorp, MHC, to waive the receipt of dividends declared by its subsidiary mid-tier stock holding company,
it is unlikely that Rhinebeck Bancorp, MHC will waive the receipt of any dividends declared by Rhinebeck
Bancorp, Inc. Moreover, since Rhinebeck Bancorp, Inc. has sold only a minority of its shares to the public and
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contributed the remaining shares to Rhinebeck Bancorp, MHC, Rhinebeck Bancorp, Inc. raised significantly less capital
than would have been the case if it sold all its shares to the public. As a result, paying dividends to Rhinebeck Bancorp,
MHC may be inequitable to public stockholders and not in their best financial interests. Therefore, unless Federal
Reserve Board regulations and policy change by allowing Rhinebeck Bancorp, MHC to waive the receipt of dividends
declared by Rhinebeck Bancorp, Inc. without diluting minority stockholders, it is unlikely that Rhinebeck Bancorp, Inc.
will pay any dividends.
Possible Conversion of Rhinebeck Bancorp, MHC to Stock Form. In the future, Rhinebeck Bancorp, MHC may
convert from the mutual to capital stock form of ownership, in a transaction commonly referred to as a “second-step
conversion.” Any second-step conversion of Rhinebeck Bancorp, MHC would require the approval of the NYSDFS and
the Federal Reserve Board.
Acquisition. The Change in Bank Control Act and its implementing regulations provide that no person or entity
may acquire control of a bank holding company, such as Rhinebeck Bancorp, Inc., without the prior non-objection or
approval of the Federal Reserve Board. Control, as defined under the Change in Bank Control Act and its implementing
regulations, means the power, directly or indirectly, to direct the management or policies of the company or the
ownership, control, or power to vote 25% or more of any class of voting securities of the company. Acquisition of more
than 10% of any class of a bank holding company’s voting securities constitutes a rebuttable presumption of control
under certain circumstances, including where, as is the case with Rhinebeck Bancorp, Inc., the issuer has registered
securities under Section 12 of the Securities Exchange Act of 1934. Separately, any company that acquires control of a
bank holding company, as “control” is defined in the federal Bank Holding Company Act and the Federal Reserve
Board’s regulations, must receive the prior approval of the Federal Reserve Board and becomes a “bank holding
company” subject to examination and regulation by the Federal Reserve Board.
New York Holding Company Regulation. Rhinebeck Bancorp, MHC and Rhinebeck Bancorp, Inc. are also subject
to regulation under New York banking law. Among other requirements, Rhinebeck Bancorp, MHC and Rhinebeck
Bancorp, Inc. must receive the approval of the NYSDFS before acquiring 10% or more of the voting stock of another
banking institution, or to otherwise acquire a banking institution by merger or purchase.
Federal Securities Laws
Rhinebeck Bancorp, Inc.’s common stock was registered with the Securities and Exchange Commission after its
offering. Rhinebeck Bancorp, Inc. is subject to the information, proxy solicitation, insider trading restrictions and other
requirements under the Securities Exchange Act of 1934.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties
for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the
accuracy and reliability of corporate disclosures pursuant to the securities laws. Rhinebeck Bancorp, Inc. has policies,
procedures and systems designed to comply with this Act and its implementing regulations, and we review and
document such policies, procedures and systems to ensure continued compliance with this Act and its implementing
regulations.
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FEDERAL AND STATE TAXATION
Federal Taxation
General. The Company and the Bank are subject to federal income taxation in the same general manner as other
corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to
summarize material federal income tax matters and is not a comprehensive description of the tax rules applicable to the
Company and the Bank.
Method of Accounting. For federal income tax purposes, the Company currently reports its income and expenses
on the accrual method of accounting and uses a tax year ending December 31 for filing its consolidated federal income
tax returns.
Net Operating Loss Carryovers. Generally, a financial institution may carry forward net operating losses
indefinitely and are subject to a limitation of 80% of taxable income. See Note 8 to the Consolidated Financial
Statements for additional information.
Capital Loss Carryovers. Generally, a financial institution may carry back capital losses to the preceding three
taxable years and forward to the succeeding five taxable years. Any capital loss carryback or carryover is treated as a
short-term capital loss for the year to which it is carried. As such, it is grouped with any other capital losses for the year
to which carried and is used to offset any capital gains. Any un-deducted loss remaining after the five-year carryover
period is not deductible. At December 31, 2024, Rhinebeck Bank had no capital loss carryovers.
Corporate Dividends. We may generally exclude from our income 100% of dividends received from Rhinebeck
Bank as a member of the same affiliated group of corporations. As of December 31, 2024, no dividends had been paid
by Rhinebeck Bank.
Audit of Tax Returns. Rhinebeck Bank’s federal income tax returns have not been audited in the most recent three-
year period.
State Taxation
Rhinebeck Bancorp, MHC, Rhinebeck Bancorp, Inc. and Rhinebeck Bank report income on a combined fiscal year
basis to New York State. The statutory tax rate is currently 6.5% for general business taxpayers, and 7.25% for general
business taxpayers with a business income base of more than $5,000,000. An alternative tax of 0.1875% on apportioned
capital is imposed to the extent that it exceeds the tax on apportioned income. The New York State alternative tax is
capped at $5 million for a tax year and is not applicable for tax years beginning January 1, 2027. Thrift institutions that
maintain a qualified residential loan portfolio are entitled to a specially computed modification that reduces the income
taxable to New York State; this is the case for the Bank.
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Item 1A. Risk Factors
In addition to factors discussed in the description of our business and elsewhere in this report, the following are
factors that could adversely affect our future results of operations and financial condition.
Risks Related to Economic Conditions
Our business may be adversely affected by downturns in the local economy.
Substantially all of our loans are to businesses and individuals in the Hudson Valley region of New York. A decline
in local economic conditions may have a greater effect on our earnings and capital than on larger financial institutions
whose operations and real estate loans are geographically diverse. Many of the loans in our portfolio are secured by real
estate. Deterioration in the real estate markets where collateral for a mortgage loan is located could negatively affect the
borrower's ability to repay the loan and the value of the collateral securing the loan. Real estate values are affected by
various other factors, including changes in general or regional economic conditions, government regulations or policies
and natural disasters. If we are required to liquidate a significant amount of collateral during a period of reduced real
estate values, our financial condition and profitability could be adversely affected. Recessionary conditions or adverse
economic conditions in our local market areas may reduce our rate of growth, affect our customers' ability to repay loans
and adversely impact our business, financial condition, and results of operations.
A decline in economic conditions could reduce demand for our products and services and/or result in increases in our
level of non-performing loans, which could have an adverse effect on our results of operations.
General economic conditions, including inflation, unemployment, money supply fluctuations and the shape of the
interest rate curve may adversely affect our profitability. Negative changes in these general business and economic
conditions could have the following consequences, any of which could have a materially adverse impact on our business,
financial condition and results of operations:
•
loan delinquencies, problem assets and foreclosures may increase;
•
our allowance for credit losses may increase;
•
demand for our products and services may decline possibly resulting in a decrease in our total loans,
total deposits, or assets;
•
collateral for loans may decline in value, thereby reducing customers’ borrowing power, and reducing
the value of assets and collateral associated with existing loans;
•
the net worth and liquidity of loan guarantors may decline, impairing their ability to honor
commitments to us; and
•
the amount of our low-cost or non-interest bearing deposits may decrease and the composition of our
deposits may be adversely affected.
Inflation can have an adverse impact on our business and on our customers.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as
inflation decreases the value of money. In the United States, the annual inflation rate peaked at 9.1% in June 2022. By
December 31, 2024, it had decreased to 2.9%. The Federal Reserve increased the target federal funds rate to combat
inflation. However, in 2024, the Federal Reserve implemented one 50 basis point and two 25 basis point rate cuts,
bringing the target range to 4.25% to 4.50% by December 2024. As inflation increased, the value of our investment
securities, particularly those with longer maturities, decreased. In addition, inflation increases the cost of goods and
services we use in our business operations, such as electricity and other utilities, which increases our non-interest
expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in
their households and businesses, which could have a negative impact on their ability to repay their loans with us. A
deterioration in economic conditions in the United States and our markets could result in an increase in loan
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delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products
and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.
Changes to trade policies and tariffs can have an adverse impact on our business and our customers.
Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively
impact the economic conditions in the markets we serve. Our customers—particularly local businesses engaged in
agriculture, manufacturing, and retail—may face higher costs for imported goods and materials, reduced export demand,
and supply chain disruptions due to increased tariffs. These challenges could lead to lower revenues, reduced
profitability, and potential layoffs, all of which may impair our customers’ ability to meet their financial obligations.
Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values,
and weakened consumer confidence. If our customers experience financial stress, we could see an increase in loan
delinquencies and credit losses, negatively affecting our asset quality and overall financial performance. Additionally,
any decline in local economic activity could reduce loan demand, deposit growth, and fee income, which are critical to
our long-term success. While we actively monitor economic and policy developments, we cannot predict the outcome of
trade negotiations or the full impact of tariffs and trade restrictions on our business, customers, and the broader
economy. Any adverse effects from tariffs or a trade war could materially and negatively impact our financial condition,
results of operations, and future growth prospects.
Interruption of our customers' supply chains could negatively impact their business and operations and impact their
ability to repay their loans.
Any material interruption in our customers’ supply chains, such as a material interruption of the resources required
to conduct their business resulting from interruptions in service by third-party providers, trade restrictions, such as
increased tariffs or quotas, embargoes or customs restrictions, social or labor unrest, natural disasters, epidemics or
pandemics or political disputes and military conflicts, that cause a material disruption in our customers' supply chains,
could have a negative impact on their business and ability to repay their borrowings with us. In the event of disruptions
in our customers' supply chains, the labor and materials they rely on in the ordinary course of business may not be
available at reasonable rates or at all.
Risks Related to Interest Rates
Changes in interest rates may reduce our profits.
Our profitability, like that of most financial institutions, depends to a large extent upon our net interest income,
which is the difference between our interest income on interest-earning assets, such as loans and securities, and our
interest expense on interest-bearing liabilities, such as deposits and borrowed funds. Accordingly, our results of
operations depend largely on movements in market interest rates and our ability to manage our interest-rate-sensitive
assets and liabilities in response to these movements. Factors such as inflation, recession and instability in financial
markets, among other factors beyond our control, may affect interest rates.
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If interest rates rise, and the interest rates on our deposits increase faster than the interest rates we receive on our
loans and investments, our interest rate spread would decrease, which would have a negative effect on our net interest
income and profitability. Furthermore, increases in interest rates may adversely affect the ability of borrowers to make
loan repayments on adjustable-rate loans, as the interest owed on such loans would increase as interest rates increase.
Conversely, decreases in interest rates can result in increased prepayments of loans and mortgage-related securities, as
borrowers refinance to reduce their borrowing costs. Under these circumstances, we are subject to reinvestment risk as
we may have to reinvest such loan or securities prepayments into lower-yielding assets, which may also negatively
impact our income. Changes in market interest rates may also affect the demand for the Company’s products and
services, competition for deposits, the secondary mortgage market, and our ability to realize gains from the sale of
assets.
Changes in interest rates also affect the value of our interest-earning assets and, in particular, our investment
securities portfolio. Generally, the fair value of fixed-rate securities fluctuates inversely with changes in interest rates.
Stockholders' equity, specifically accumulated other comprehensive income (loss), is increased or decreased by the
amount of change in the estimated fair value of our securities available for sale, net of deferred income taxes. Increases
in interest rates generally decrease the fair value of securities available for sale, which adversely impacts stockholders'
equity. On December 31, 2024, we recorded other comprehensive losses, net of tax, of $10.5 million related to net
changes in unrealized holding losses in our available-for-sale investment securities portfolio.
Any substantial or unexpected change in market interest rates could have a material adverse effect on our financial
condition, liquidity and results of operations. Changes in interest rates also may negatively impact our ability to originate
real estate loans, the value of our assets and our ability to realize gains from the sale of our assets, all of which may
ultimately affect our earnings. For further discussion of how changes in interest rates could impact us, see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Management of Market
Risk.”
Risks Related to our Lending Activities
Our automobile lending exposes us to increased credit risks.
At December 31, 2024, $295.7 million, or 30.3% of our total loan portfolio and 23.5% of our total assets, consisted
of indirect automobile loans and $5.7 million, or 0.6% of our total loan portfolio, consisted of automobile loans that we
also originated directly. Automobile loans are inherently risky as they are secured by assets that may be difficult to
locate and can depreciate rapidly. In some cases, repossessed collateral for a defaulted automobile loan may not provide
an adequate source of repayment for the outstanding loan and the remaining deficiency may not warrant further
collection efforts against the borrower. Automobile loan collections depend on the borrower’s continuing financial
stability, and therefore, are more likely to be adversely affected by job loss, divorce, illness, or personal bankruptcy.
Additional risk elements associated with indirect lending include the limited personal contact with the borrower as a
result of indirect lending through non-bank channels, namely automobile dealers, and reliance on automobile dealers to
comply with fair lending practices. See “Item 1. Business — Loan Underwriting Risks.”
Our emphasis on commercial real estate and commercial business lending involves risks that could adversely affect
our financial condition and results of operations.
We emphasize the originations of commercial real estate and commercial business loans. At December 31, 2024,
our commercial real estate (which includes multi-family real estate loans and commercial construction loans) and
commercial business loans totaled $574.1 million, or 58.9% of our loan portfolio. While these types of loans are
potentially more profitable than residential mortgage loans due primarily to bearing generally higher interest rates and
larger balances, they present greater risk due to greater dependency on the successful operation of the properties, and are
generally more sensitive to regional and local economic conditions, making future losses more difficult to predict. These
loans also generally have relatively large balances to single borrowers or related groups of borrowers. Also, many of our
borrowers have more than one of these types of loans outstanding. Consequently, an adverse development with respect
to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse
development with respect to a residential mortgage loan. In addition, changes in consumer preferences about where they
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work, live, shop and eat can also impact commercial real estate, which could result in declines in occupancy and declines
in property values. Accordingly, any charge-offs may be larger on a per loan basis than those incurred with our
residential or consumer loans. See “Item 1. Business — Loan Underwriting Risks.”
Our allowance for credit losses may not be sufficient to cover actual loan losses.
We maintain an allowance for credit losses, which is established through a provision for credit losses that represents
management’s best estimate of the lifetime expected losses on loans. We make various assumptions and judgments about
the collectability of loans in our portfolio, including the creditworthiness of borrowers and the value of the real estate,
automobiles and other assets serving as collateral for the repayment of loans. In determining the adequacy of the
allowance for credit losses, we rely on our experience and our evaluation of economic conditions and other qualitative
factors. If our assumptions prove to be incorrect, our allowance for credit losses may not be sufficient to cover losses
inherent in our loan portfolio, and adjustments may be necessary.
The allowance for credit losses is dependent on various factors, including credit quality, macroeconomic forecasts
and conditions, composition of our loans and securities portfolios, and other management judgements. There can be no
assurance that the Company’s allowance for credit losses will be adequate to cover actual losses. In addition, federal and
state regulators periodically review our allowance for credit losses and may require us to increase our provision for
credit losses or recognize further loan charge-offs. Significant additions to the allowance could materially decrease our
net income.
Our non-owner occupied commercial real estate loans may expose us to increased credit risk.
At December 31, 2024, $361.6 million, or 37.1% of our total loan portfolio and 74.9% of our commercial real estate
loan portfolio, consisted of loans secured by non-owner occupied commercial real estate loans. Loans secured by non-
owner occupied properties generally expose a lender to greater risk of non-payment and loss than loans secured by
owner occupied properties because repayment of such loans depend primarily on the tenant’s continuing ability to pay
rent to the property owner, who is our borrower, or, if the property owner is unable to find a tenant, the property owner’s
ability to repay the loan without the benefit of a rental income stream. In addition, the physical condition of non-owner
occupied properties may be below that of owner occupied properties due to lenient property maintenance standards that
negatively impact the value of the collateral properties.
We are subject to environmental liability risk associated with lending activities.
A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental
liabilities with respect to one or more of these properties. During the ordinary course of business, we may foreclose on
and take title to properties securing defaulted loans. In doing so, there is a risk that hazardous or toxic substances could
be found on these properties. If so, we may be liable for remediation costs, as well as for personal injury and property
damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected
any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities
and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In
addition, future laws or regulations or more stringent interpretations or enforcement policies with respect to existing laws
or regulations may increase our exposure to environmental liability. Although we have policies and procedures to
perform an environmental review before initiating any foreclosure on nonresidential real property, these reviews may not
be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities
associated with an environmental hazard could have a material adverse effect on us.
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Risks Related to Our Funding and Liquidity
Our inability to generate core deposits may cause us to rely more heavily on wholesale funding strategies for funding
and liquidity needs, which could have an adverse effect on our net interest margin and profitability.
We must maintain sufficient funds to respond to the needs of depositors and borrowers. Deposits have traditionally
been our primary source of funds for use in lending and investment activities. We also receive funds from loan
repayments, investment maturities and income on other interest-earning assets. While we emphasize generating
transaction accounts, we cannot guarantee if and when this will occur. Further, the considerable competition for deposits
in our market area also has made, and may continue to make, it difficult for us to obtain reasonably priced deposits.
Moreover, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return
tradeoff. If we are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth
or deposit outflows, we may be forced seek other sources of funds, including certificates of deposit, FHLB advances,
brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers,
which may be more expensive and have an adverse effect on our net interest margin and profitability. Total deposits
decreased $9.7 million, or 0.9%, to $1.02 billion at December 31, 2024 from $1.03 billion at December 31, 2023.
A lack of liquidity could adversely affect our financial condition and results of operations and result in regulatory
limits being placed on the Company.
Liquidity is essential to our business. We rely on our ability to generate deposits and effectively manage the
repayment and maturity schedules of our loans to ensure that we have adequate liquidity to fund our operations. An
inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial
negative effect on our liquidity. Our most important source of funds is deposits. Deposit balances can decrease when
customers perceive alternative investments as providing a better risk/return tradeoff. If customers move money out of
deposits, we may lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest
income and net income. Depending on the capitalization and regulatory treatment of depository institutions, including
whether an institution is subject to a supervisory prompt corrective action directive, certain additional regulatory
restrictions and prohibitions may apply, including restrictions on interest rates paid on deposits and on the acceptance of
brokered deposits. Significant deposit withdrawals could materially reduce our liquidity, and, in such an event, we may
be required to replace such deposits with higher-costing borrowings.
Other primary sources of funds consist of cash flows from operations and sales of investment securities and
borrowings from the FHLB of New York and the Federal Reserve. We also may borrow funds from third-party lenders,
such as other financial institutions. Our access to funding sources in amounts adequate to finance or capitalize our
activities, or on terms that are acceptable to us, could be impaired by factors that affect us directly or the financial
services industry or economy in general, such as disruptions in the financial markets or negative views and expectations
about the prospects for the financial services industry. Our liquidity is also affected by a decrease in the sale of mortgage
loans as a result of our decision to retain more mortgage loans in the portfolio, higher market interest rates negatively
impacting originations, a downturn in our markets or by one or more adverse regulatory actions against us. A lack of
liquidity could also attract increased regulatory scrutiny and potential restraints imposed on us by regulators.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our
expenses or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which
could have a material adverse impact on our liquidity, business, financial condition and results of operations.
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Risk Related to our Business Strategy
Our long-term business strategy involves moderate growth, and our financial condition and results of operations may
be adversely affected if we fail to grow or fail to manage our growth effectively.
Our assets decreased $57.4 million, or 4.4%, from $1.31 billion at December 31, 2023 to $1.26 billion at
December 31, 2024, primarily due to decreases in loans and available for sale securities. Due to the rebalancing of our
portfolio, we expect the size of our balance sheet to stabilize in 2025. We then expect to resume moderate growth in our
total assets and deposits going forward, accompanied by relative increases in the scale of our operations. Achieving our
growth targets requires us to attract customers that currently bank at other financial institutions in our market. Our ability
to grow successfully will depend on a variety of factors, including our ability to attract and retain experienced bankers,
the availability of attractive business opportunities and competition from other financial institutions in our market area.
While we believe we have the management resources and internal systems in place to successfully manage our future
growth, there can be no assurance that growth opportunities will be available or that we will successfully manage our
growth. If we do not manage our growth effectively, we may not be able to execute our business plan, which would have
an adverse effect on our financial condition and results of operations.
Risks Related to Laws and Regulations
Changes 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.
We are subject to extensive regulation, supervision and examination by our banking regulators. Such regulation and
supervision govern the activities in which a financial institution and its holding company may engage and are intended
primarily for the protection of insurance funds and the depositors and borrowers of Rhinebeck Bank rather than for the
protection of our stockholders. Regulatory authorities have extensive discretion in their supervisory and enforcement
activities, including the ability to impose restrictions on our operations, classify our assets and determine the level of our
allowance for credit losses. These regulations, along with the currently existing tax, accounting, securities, deposit
insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial
institutions conduct business, implement strategic initiatives, and govern financial reporting and disclosures. Any change
in such regulation and oversight, whether in the form of regulatory policy, new regulations, legislation or supervisory
action, may have a material impact on our operations. Further, compliance with such regulation may increase our costs
and limit our ability to pursue business opportunities.
The fiscal, monetary and regulatory policies of the federal government and its agencies could have an adverse effect
on our results of operations.
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of
the FRB. An important function of the FRB is to regulate the money supply and credit environment. Among the
instruments used by the FRB to implement these objectives are open market purchases and sales of U.S. Government
securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These
instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank
loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits. The FRB’s
policies determine in large part the cost of funds for lending and investing and the return earned on those loans and
investments, both of which affect our net interest margin. Its policies can also adversely affect borrowers, potentially
increasing the risk that they may fail to repay their loans. The monetary policies and regulations of the FRB have had a
significant effect on the overall economy and the operating results of financial institutions in the past and are expected to
continue to do so in the future.
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Additionally, Congress and the administration through executive orders controls fiscal policy through decisions on
taxation and expenditures. Depending on industries and markets involved, changes to tax law and increased or reduced
public expenditures could affect us directly or the business operations of our customers.
Changes in Federal Reserve and other governmental policies, fiscal policy, and our regulatory environment
generally are beyond our control, and we are unable to predict what changes may occur or the manner in which any
future changes may affect our business, financial condition and results of operations.
Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines
or sanctions.
The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial
institutions from being used for money laundering and terrorist activities. If such activities are detected, financial
institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes
Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the
identity of customers that open new financial accounts. Failure to comply with these regulations could result in fines or
sanctions, including restrictions on conducting acquisitions or establishing new branches. While we have developed
policies and procedures designed to assist in compliance with these laws and regulations, these policies and procedures
may not be effective in preventing violations of these laws and regulations.
Changes in accounting standards could affect reported earnings.
The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board,
the Securities and Exchange Commission and bank regulators, periodically change the financial accounting and
reporting guidance that governs the preparation of our financial statements. These changes can be hard to predict and can
materially impact how we record and report our financial condition and results of operations. In some cases, we could be
required to apply new or revised guidance retroactively.
We are subject to more stringent capital requirements, which may adversely impact our return on equity, or constrain
us from paying dividends or repurchasing shares.
Federal regulations establish minimum capital requirements for insured depository institutions, including minimum
risk-based capital and leverage ratios, and define what constitutes “capital” for calculating these ratios. The regulations
establish a “capital conservation buffer” of 2.5%, which, when added to the minimum capital ratios, result in the
following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 to risk-based assets capital ratio
of 8.5%, and (3) a total capital ratio of 10.5%. An institution will be subject to limitations on paying dividends, engaging
in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These
limitations establish a maximum percentage of eligible retained income that can be utilized for such actions.
The application of more stringent capital requirements could, among other things, require us to maintain higher
capital levels resulting in lower returns on equity, raise capital and result in regulatory actions if we were to be unable to
comply with such requirements. Furthermore, the imposition of additional liquidity requirements could result in our
having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets.
Implementation of changes to asset risk weightings for risk-based capital calculations, items included or deducted in
calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its
business strategy, and could limit our ability to make distributions, including paying out dividends or buying back
shares. See “Item 1. Supervision and Regulation — Federal Bank Regulation — Capital Requirements.”
Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and
results of operations.
The effects of climate change continue to create a significant level of concern for the state of the global
environment. As a result of the increased political and social awareness surrounding the issue, the U.S. Congress, state
legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global
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effort to combat climate change. While it is impossible to predict how climate change may directly impact our financial
condition and operations, the physical effects of climate change may present certain risks to our customers.
Unpredictable and more frequent weather disasters may adversely impact the value of real property securing the loans in
our portfolios. Further, the effects of climate change may negatively impact regional and local economic activity, which
could lead to an adverse effect on our customers and impact our ability to raise and invest capital in potentially impacted
communities.
Loss of Emerging Growth Company Status May Increase Our Costs and Regulatory Burdens
As of December 31, 2024, we no longer qualify as an Emerging Growth Company as defined under the Jumpstart
Our Business Startups (JOBS) Act. As a result, we are now subject to additional regulatory and reporting requirements,
including enhanced financial disclosures, stricter internal control audits, and increased compliance costs. These
additional regulatory burdens and associated costs may negatively impact our financial condition, results of operations,
and cash flows. Furthermore, failure to comply with these enhanced requirements could expose us to legal and
regulatory risks, including potential penalties or loss of investor confidence in our financial reporting.
Risks Related to Privacy, Security and Technology
Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how
we collect and use personal information and adversely affect our business opportunities.
We are subject to various privacy, information security and data protection laws, such as the Gramm-Leach-Bliley
Act, which, among other things, requires privacy disclosures, and maintenance of a robust security program, which are
increasingly subject to change and that could have a significant impact on our current and planned privacy, data
protection and information security-related practices, our collection, use, sharing, retention and safeguarding of
consumer or employee information, and some of our current or planned business activities. New laws or changes to
existing laws may increase our costs of compliance, could reduce income from certain business initiatives and could
restrict our ability to provide certain products and services, which could have a material adverse effect on our business,
financial conditions or results of operations. Our regulators also hold us responsible for privacy and data protection
obligations performed by our third-party service providers while providing services to us. Our failure to comply with
privacy, data protection and information security laws could result in potentially significant regulatory or governmental
investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse
effect on our business, financial condition or results of operations.
Systems failures or breaches of our network security could subject us to increased operating costs as well as litigation
and other liabilities.
Our operations depend upon our ability to protect our computer systems and network infrastructure against damage
from physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, as well as from security
breaches, denial of service attacks, viruses, worms and other disruptive problems caused by hackers. Any damage or
failure that causes an interruption in our operations could have a material adverse effect on our financial condition and
results of operations. Computer break-ins, phishing and other disruptions could also jeopardize the security of
information stored in and transmitted through our computer systems and network infrastructure, which may result in
significant liability to us and may cause existing and potential customers to refrain from doing business with us.
Although we, with the help of third-party service providers, continue to implement security technology and establish
operational procedures designed to prevent such damage, our security measures may not be successful. In addition,
advances in computer capabilities, new discoveries in the field of cryptography or other developments could result in a
compromise or breach of the algorithms we and our third-party service providers use to encrypt and protect customer
transaction data. A failure of such security measures could have a material impact on the Bank’s operations or a material
adverse effect on our financial condition and results of operations.
It is possible that we could incur significant costs associated with a breach of our computer systems. While we have
cyber liability insurance, there are limitations on coverage. Furthermore, cyber incidents carry a great risk of injury to
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our reputation. Finally, depending on the type of incident, banking regulators can impose restrictions on our business and
consumer laws may require reimbursement of customer losses.
Our risk and exposure to cyber-attacks or other information security breaches remains heightened because of,
among other things, the evolving nature of these threats, our plans to continue to enhance our internet banking and
mobile banking channel strategies, our expanded geographic footprint and that a portion of our employee base works
remotely. There continues to be a rise in security breaches and cyber-attacks within the financial services industry,
especially in the commercial banking sector. As cyber threats continue to evolve, we may be required to expend
significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate
any information security vulnerabilities.
Disruptions or failures in the physical infrastructure or operating systems that support our businesses, customers or
third parties, or cyber-attacks or security breaches of the networks, systems or devices that our customers or third parties
use to access our products and services could result in customer attrition, financial losses, the inability of our customers
or vendors to transact business with us, violations of applicable privacy and other laws, regulatory fines, penalties or
intervention, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs, any
of which could materially adversely affect our results of operations or financial condition.
While our Board of Directors takes an active role in cybersecurity risk tolerance, we rely to a large degree on
management and outside consultants in overseeing cybersecurity risk management.
Our Board of Directors takes an active role in our cybersecurity risk management and all members receive
cybersecurity training annually. The Board reviews the annual risk assessments and approves information technology
policies, which include cybersecurity. Furthermore, our Audit Committee is responsible for reviewing all audit findings
related to information technology general controls, internal and external vulnerability, and penetration testing. The Board
receives an annual information security report from our virtual Chief Information Security Officer and Chief Executive
Officer as it relates to cybersecurity and related issues. We also engage outside consultants to support our cybersecurity
efforts. However, our directors do not have significant experience in cybersecurity risk management outside of the
Company and therefore, its ability to fulfill its oversight function remains dependent on the input it receives from
management and outside consultants.
Our inability to successfully implement technological change may adversely impact our business.
The financial services industry is continually undergoing rapid technological change with frequent introductions of
new, technology-driven products and services which increases efficiency and enables financial institutions to better serve
customers and reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers
by using technology to provide products and services that will satisfy customer demands, as well as to create additional
efficiencies in our operations. We may not be able to effectively implement new, technology-driven products and
services or be successful in marketing these products and services to our customers, which failure could have a material
adverse effect on our business, financial condition or results of operations.
Risks Related to Our Business and Operations
Our cost of operations is high relative to our assets. Our failure to maintain or reduce our operating expenses may
reduce our profits.
Our non-interest expenses totaled $36.8 million and $36.4 million for the years ended December 31, 2024 and 2023,
respectively. Although we have decreased our expenses and have achieved certain efficiencies, our efficiency ratio,
comparative to peers, remains high. Our efficiency ratio totaled 82.34% and 83.28% for the years ended December 31,
2024 and 2023, respectively. Failure to control or maintain our expenses may reduce future profits.
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Changes in the valuation of our securities portfolio may reduce our profits and our capital levels.
The market value of our securities portfolio may fluctuate, potentially increasing accumulated other comprehensive
loss or reducing earnings. During 2024, we undertook a balance sheet restructuring that reduced our accumulated other
comprehensive loss on securities from $26.1 million to $10.5 million. As part of this restructuring, we recognized a $16
million loss on our available-for-sale securities. At December 31, 2024, our other comprehensive losses, net of tax, of
$10.5 million was related to net changes in unrealized holding losses in the available-for-sale investment securities
portfolio. Fluctuations in market value may be caused by changes in market interest rates, lower market prices for
securities and limited investor demand.
Declines in market value may result in impairments of these assets, which may lead to accounting charges that could
have a material adverse effect on our net income and stockholders’ equity. Management evaluates securities for
impairment related to credit losses on at least a quarterly basis. If this evaluation shows impairment to the actual or
projected cash flows associated with one or more securities, we may take a charge to earnings to reflect such
impairment. Changes in interest rates may also have an adverse effect on our financial condition, as our available-for-
sale securities are reported at their estimated fair value, and therefore are affected by fluctuations in interest rates. We
increase or decrease our stockholders’ equity by the amount of change in the estimated fair value of the available-for-
sale securities, net of taxes.
Strong competition within our market area may reduce our profits and slow growth.
We face strong competition in making loans and attracting deposits. Price competition for loans and deposits
sometimes requires us to charge lower interest rates on our loans and pay higher interest rates on our deposits, which
may reduce our net interest income. Many of the institutions with which we compete have substantially greater resources
and lending limits than we have and may offer services that we do not provide. Our competitors often aggressively price
loan and deposit products when they enter into new lines of business or new market areas. If we are unable to effectively
compete in our market area, our profitability would be negatively affected. The greater resources and broader offering of
deposit and loan products of some of our competitors may also limit our ability to increase our interest-earning assets.
Competition also makes it more difficult and costly to attract and retain qualified employees. For more information
about our market area and the competition we face, see “Item 1. Business — Market Area” and “— Competition.”
The value of our goodwill may decline in the future.
As of December 31, 2024, we had $2.2 million of goodwill. A significant decline in our expected future cash flows,
a significant adverse change in the business climate or slower growth rates, any or all of which could be materially
impacted by many of the risk factors discussed herein, may necessitate our taking charges in the future related to the
impairment of our goodwill. Future regulatory actions could also have a material impact on assessments of goodwill for
impairment. If we were to conclude that a future write-down of our goodwill is necessary, we would record the
appropriate charge, which could have a material adverse effect on our results of operations.
Our success depends on retaining certain key personnel.
Our performance largely depends on the talents and efforts of highly skilled individuals who comprise our senior
management team. We rely on key personnel to manage and operate our business, including major revenue generating
functions such as loan and deposit generation and our wealth management business. The loss of key staff may adversely
affect our ability to maintain and manage these functions effectively, which could negatively affect our income. In
addition, loss of key personnel could result in increased recruiting and hiring expenses, which would reduce our net
income. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and
motivate our existing employees.
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Changes in management’s estimates and assumptions may have a material impact on our consolidated financial
statements and our financial condition or operating results.
In preparing the periodic reports we are required to file under the Securities Exchange Act of 1934, including our
consolidated financial statements, our management is required under applicable rules and regulations to make estimates
and assumptions as of specified dates. These estimates and assumptions are based on management’s best estimates and
experience at such times and are subject to substantial risk and uncertainty. Materially different results may occur as
circumstances change and additional information becomes known. Areas requiring significant estimates and assumptions
by management include our evaluation of the adequacy of our Allowance for credit losses, the determination of our
deferred income taxes, our fair value measurements and our determination of goodwill impairment.
Our risk management framework may not be effective in mitigating risk and reducing the potential for significant
losses.
Our risk management framework is designed to minimize risk and loss. We seek to identify, measure, monitor,
report and control our exposure to risk, including strategic, market, liquidity, compliance and operational risks. While we
use broad and diversified risk monitoring and mitigation techniques, these techniques are inherently limited because they
cannot anticipate the existence or future development of unanticipated or unknown risks. Recent economic conditions
and heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have
increased our level of risk. We could suffer losses if we fail to properly anticipate and manage these risks.
Risks Relating to Ownership of Our Common Stock
We may not pay any dividends on our common stock.
The Company’s Board of Directors has the authority to declare dividends on our common stock subject to statutory
and regulatory requirements. We currently intend to retain all our future earnings, if any, for use in our business and do
not expect to pay any cash dividends on our common stock in the foreseeable future. Any future determination to pay
cash dividends will be made by our board of directors and will depend upon our financial condition, results of
operations, capital requirements, restrictions under Federal Reserve Board regulations and policy, our business strategy
and other factors that our board of directors deems relevant. See “Item1. Business — Waivers of Dividends by
Rhinebeck Bancorp, MHC.”
Our common stock is not heavily traded, and the stock price may fluctuate significantly.
Our common stock is traded on The NASDAQ Capital Market (ticker symbol “RBKB”), but the volume of shares
traded is relatively low. Prices on stock that is not heavily traded, such as our common stock, can be more volatile than
heavily traded stock. Factors such as our financial results, the introduction of new products and services by us or our
competitors, publicity regarding the banking industry, and various other factors affecting the banking industry may have
a significant impact on the market price of the shares of our common stock. Management also cannot predict the extent
to which an active public market for our common stock will develop or be sustained in the future. Accordingly,
stockholders may not be able to sell their shares of our common stock at the volumes, prices, or times that they desire.
Persons who have purchased stock will own a minority of the Company’s common stock and will not be able to
exercise voting control over most matters put to a vote of stockholders.
Rhinebeck Bancorp, MHC owns a majority of the Company’s common stock and, through its Board of Directors, is
able to exercise voting control over most matters put to a vote of stockholders. Generally, the same directors and officers
who manage Rhinebeck Bank also manage the Company and Rhinebeck Bancorp, MHC. Our directors and officers, or
Rhinebeck Bancorp, MHC, may take action that the public stockholders believe to be contrary to their interests. For
example, Rhinebeck Bancorp, MHC may exercise its voting control to prevent a sale or merger transaction in which
stockholders could receive a premium for their shares. The only matters that public stockholders are able to exercise
voting control over include proposals to implement stock-based benefit plans or initiate a “second-step” conversion.
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The Company’s Articles of Incorporation and Bylaws and Maryland law may discourage a corporate takeover.
The Company’s Articles of Incorporation and Bylaws contain certain provisions designed to enhance the ability of
the Company’s board of directors to deal with attempts to acquire control of the Company, including a classified board,
the ability to classify and reclassify unissued shares of stock of any class or series of stock by setting, fixing, eliminating,
or altering in any one or more respects the preferences, rights, voting powers, restrictions and qualifications of, dividends
on, and redemption, conversion, exchange, and other rights of, such securities and a requirement for any stockholder
who desires to nominate a director to abide by strict notice requirements.
Maryland law also contains anti-takeover provisions that apply to the Company. The Maryland Business
Combination Act generally prohibits, subject to certain limited exceptions, corporations from being involved in any
“business combination” (defined in the Act) with any “interested shareholder” for a period of five years following the
most recent date on which the interested shareholder became an interested shareholder. The Maryland Control Share
Acquisition Act applies to acquisitions of “control shares,” which, subject to certain exceptions, are shares the
acquisition of which entitle the holder, directly or indirectly, to exercise or direct the exercise of the voting power of
shares of stock of a corporation in the election of directors. Control shares have limited voting rights.
Although these provisions do not preclude a takeover, they may have the effect of discouraging, delaying or
deferring a tender offer or takeover attempt that a stockholder might consider in his or her best interest, including those
attempts that might result in a premium over the market price for the common stock. Such provisions will also render the
removal of the Company’s board of directors and of management more difficult and, therefore, may serve to perpetuate
current management. These provisions could potentially adversely affect the market prices of the Company’s securities.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Risk Management and Strategy
Rhinebeck Bank recognizes the critical importance of developing, implementing, and maintaining robust
cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of
our data. Cybersecurity risk management is an integral part of our overall enterprise risk management program. As a
financial services company, cyber threats are ever present and growing, and the potential exists for a cybersecurity
incident disrupting business operations and compromising sensitive data. Our risk management program is designed to
identify, assess, and mitigate risks across various aspects of our company, including financial, operational, regulatory,
reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on
technology and the potential of cyber threats. Our objective for managing cybersecurity risk is to avoid or minimize the
impact of external threat events or other efforts to penetrate, disrupt or misuse our systems or information. The structure
of our information security program is designed around the Federal Financial Institutions Examination Council
Cybersecurity Guidelines, regulatory guidance, and other industry standards. In addition, we leverage certain industry
and government associations, third-party benchmarking, audits and threat intelligence feeds to facilitate and promote
program effectiveness. We continuously monitor evolving regulatory requirements related to cybersecurity and ensure
that our cybersecurity program fully complies with all applicable laws and standards.
Managing Material Risks and Integrated Overall Risk Management
Rhinebeck Bank has strategically integrated cybersecurity risk management into our broader risk management
framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that
cybersecurity considerations are an integral part of our decision-making processes at every level. Our internal risk
management team works closely with our IT department to evaluate and address cybersecurity risks in alignment with
our business objectives and operational needs. We also employ a variety of preventative and detective tools designed to
monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent
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threats. We have established processes and systems designed to mitigate cyber risk, including ongoing education and
training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests.
Engaging Third Parties on Risk Management
Recognizing the complexity and evolving nature of cybersecurity threats, Rhinebeck Bank engages with a range of
independent external data security professionals, including cybersecurity risk assessors, consultants, internal and external
auditors, and insurance professionals to obtain a holistic view of our cybersecurity landscape. These partnerships enable
us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain at the
forefront of industry best practices. Our collaboration with these third parties includes regular audits, threat assessments,
and consultations on cybersecurity enhancements to proactively address new and evolving risks and strengthen our cyber
security program.
Mitigating Third-Party Risk
Because we are aware of the risks associated with third-party service providers, Rhinebeck Bank implements
stringent processes to oversee and manage these risks. We conduct thorough security assessments of all third-party
providers with access to Customer Non-Public Information before engagement and maintain ongoing monitoring to
ensure compliance with strict cybersecurity standards.
Risks from Cybersecurity Threats
We have not encountered any cybersecurity incidents, directly or indirectly, that have materially affected or are
reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial
condition.
Governance
The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity
threats. The Board has established oversight mechanisms to ensure effective governance in managing these risks because
it recognizes the significance of these threats to our operational integrity, shareholder and customer confidence and
reputation.
Board of Directors Oversight
The Board is responsible for the oversight of cybersecurity risk management and is composed of members with
diverse expertise in risk management, technology, and finance, thereby equipping them to manage and prevent
cybersecurity risks effectively.
Management’s Role in Managing Risk
The risk management function is led by the General Counsel and Chief Risk Officer (“CRO”), the SVP, Information
Technology, the Information Security Officer, and the virtual Chief Information Security Officer (“vCISO”) employed
by DeepSeas Security, a cyber defense services business that partners with customers to reduce cybersecurity risks and
the related costs. The vCISO and the CEO each play a pivotal role in informing the Board of Directors on cybersecurity
risks. They provide comprehensive briefings to both the Board and the Audit Committee at least once per year and more
frequent as needed. These briefings encompass a broad range of topics, including:
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● The current cybersecurity landscape and emerging threats;
● The status of ongoing cybersecurity initiatives and strategies;
● Incident reports and issues identified from any cybersecurity events; and
● Compliance with regulatory requirements and industry standards.
● Vulnerability/patch reporting for end points on the Bank’s network
In addition to our regularly scheduled Board meetings, the General Counsel and CRO, the SVP, Information
Technology, the vCISO and the CEO regularly communicate regarding emerging or potential cybersecurity risks. They
discuss any significant developments in the cybersecurity domain, which when reported to the Board, ensures the
Board’s oversight is proactive and responsive. The Board of Directors actively participates in strategic decisions related
to cybersecurity, offering guidance and approval for major initiatives. This involvement ensures that cybersecurity
considerations are integrated into the broader strategic objectives of Rhinebeck Bank. The Board of Directors closely
reviews the annual vCISO report of the Bank’s cybersecurity posture and the effectiveness of its risk management
strategies prior to approval. This review helps in identifying areas for improvement and ensuring the alignment of
cybersecurity efforts with the overall risk management framework.
Risk Management Personnel
The vCISO and the Information Security Officer directly report to the General Counsel and CRO. The vCISO,
CRO, the SVP, Information Technology, and Information Security Officer meet regularly to discuss both internal and
external cybersecurity risks and incidents. The CRO, the SVP, Information Technology and the Information Security
Officer also regularly meet with the CEO to update him on any cybersecurity risks and incidents affecting us. This
ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing
Rhinebeck Bank. Furthermore, all significant cybersecurity matters and strategic risk management decisions are
promptly escalated to the Board of Directors, ensuring that they have an up-to-date, comprehensive understanding of and
can provide guidance on critical cybersecurity issues.
Primary responsibility for assessing and providing strategic direction to our cybersecurity program resides with our
vCISO at DeepSeas Security. With over 20 years of global leadership and management experience in the field of
cybersecurity, our vCISO brings a wealth of expertise to his role. His experience includes prior CISO leadership roles in
the fintech sector, where he developed an expert level of understanding of the intersection between financial regulations
and cloud-based technologies. His in-depth knowledge and experience are instrumental in developing and executing our
cybersecurity strategies. Our vCISO oversees our governance programs, works with our technology-focused leaders and
partners to align security and compliance, and has helped define our employee security awareness training program.
Monitoring Cybersecurity Incidents
The vCISO is informed about the latest developments in cybersecurity, including potential threats and innovative
risk management techniques. This knowledge is crucial for the effective prevention, detection, mitigation, and
remediation of cybersecurity incidents. The vCISO provides structure for clear processes to ensure the regular
monitoring of our information systems. At Rhinebeck Bank, this includes the deployment of advanced security
measures and regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, our
partnership with DeepSeas Security allows us to be equipped with a well-defined incident response plan that is
adequately resourced. This plan includes immediate actions to mitigate the impact and long-term strategies for
remediation and prevent future incidents.
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Item 2. Properties
At December 31, 2024, we conducted business through our corporate office in Poughkeepsie and 13 other retail
banking offices located in Rhinebeck, Fishkill, Goshen, Hopewell Junction, Hyde Park, Kingston, Middletown,
Newburgh, Poughkeepsie (three branch offices), Red Hook and Warwick, as well as two representative offices in
Montgomery and Albany. We own six and lease nine properties, and own three other buildings situated on land
controlled under long-term leases. At December 31, 2024, the net book value of our land, buildings, furniture, fixtures
and equipment was $14.1 million.
In the first quarter of 2024, the Bank sold the Bank’s Beacon branch office in Wappingers Falls, New York, for $2.9
million to Heritage Financial Credit Union, a New York State chartered credit union. The sale included the land and
building, including all branch premises and equipment. All of the branch accounts were redomiciled to the customer’s
nearest branch and all employees were placed in open positions. An impairment expense of $375,000 was taken on the
property in December 2023.
Item 3. Legal Proceedings
Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation
proceedings on properties in which we hold security interests, claims involving the making and servicing of real property
loans and other issues incident to our business. At December 31, 2024, we were not a party to any pending legal
proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash
flows.
Item 4. Mine Safety Disclosures
Not applicable.
46
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
The common stock of the Company is listed on The NASDAQ Capital Market under the symbol “RBKB”. At
February 28, 2025, the Company had 332 stockholders of record. Certain shares of the Company are held in “nominee”
or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the
foregoing number.
The Company currently does not anticipate paying a dividend to its stockholders. The payment and amount of
any dividend payments will be subject to statutory and regulatory limitations, and will depend upon a number of factors,
including the following: regulatory capital requirements; our financial condition and results of operations; our other uses
of funds for the long-term value of stockholders; tax considerations; the Federal Reserve Board’s current regulations
restricting the waiver of dividends by mutual holding companies; and general economic conditions. See “Item1.
Business — Waivers of Dividends by Rhinebeck Bancorp, MHC.”
In September 2022, the Board approved a stock repurchase plan pursuant to which the Company was authorized
to repurchase up to 247,506 shares of its common stock, of which 47,506 shares remain available for repurchase. The
repurchase plan has no expiration date. No shares were repurchased under the stock repurchase plan during the three
months ended December 31, 2024.
There were no sales of unregistered securities during the quarter ended December 31, 2024.
Item 6. [Reserved]
47
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis reflects information contained in our audited consolidated financial statements and
other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of
operations. The information in this section has been derived from the audited consolidated financial statements contained
within this Form 10-K.
Overview
Net Interest Income. Our primary source of income is net interest income. Net interest income is the difference
between interest income, which is the income we earn on our loans and investments, and interest expense, which is the
interest we pay on our deposits and borrowings.
Provision for Credit Losses. The allowance for credit losses is a valuation allowance for the estimated lifetime
credit losses. The allowance for credit losses is increased through charges to the provision for credit losses. Loans are
charged against the allowance when management believes that the collectability of the principal loan amount is not
probable. Recoveries on loans previously charged-off, if any, are credited to the allowance for credit losses when
realized.
Non-Interest Income. Our primary sources of non-interest income are service charges on deposit accounts,
investment advisory income, net gains in the cash surrender value of bank owned life insurance and other income.
Non-Interest Expenses. Our non-interest expenses consist of salaries and employee benefits, net occupancy and
equipment, data processing, professional fees, marketing expenses, premium payments we make to the FDIC for
insurance of our deposits and other general and administrative expenses.
Income Tax Expense. Our income tax expense is the total of the current year income tax due or refundable and
the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for
the temporary differences between the carrying amounts and the tax basis of assets and liabilities, computed using
enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized.
48
Business Strategy
Based on an extensive review of the current opportunities in our primary market area as well as our resources and
capabilities, we are pursuing the following business strategies:
•
Prudent management of our indirect automobile loan portfolio. We originate automobile loans through a
network of 91 automobile dealerships (61 in the Hudson Valley region and 30 in Albany, New York). Over the
past three years, we have actively decreased our indirect automobile loan portfolio by decreasing loan
originations through increased pricing and conservative underwriting criteria, and we plan to continue this
strategy to further reduce exposure while focusing on higher-yielding opportunities within our portfolio. Our
indirect automobile loan portfolio totaled $295.7 million, or 30.3% of our total loan portfolio and 23.5% of total
assets, at December 31, 2024 as compared to $394.2 million, or 39.1% of our total loan portfolio and 30.0% of
total assets, at December 31, 2023.
•
Focus on commercial real estate, multi-family real estate and commercial business lending. We believe that
commercial real estate, multi-family real estate and commercial business lending offer opportunities to invest in
our community, increase the overall yield earned on our loan portfolio and manage interest rate risk. We intend
to continue to increase our originations of these types of loans in our primary market area and may consider
hiring additional lenders as well as originating loans secured by properties located in areas that are contiguous
to our current market area. We also occasionally participate in commercial real estate loans originated in areas
in which we do not have a market presence. The purchase of loan pools may be considered in the event our
organic loan production does not meet our expectations.
•
Increase core deposits, including demand deposits. Deposits are our primary source of funds for lending and
investment. Our intention to expand our core deposits (which we define as all deposits except for certificates of
deposit), was upended in 2023 with the rising interest rates as depositors sought higher rates causing our
certificates of deposit to increase and our core deposits to decrease. Deposits were also impacted as some
depositors withdrew funds in reaction to the highly publicized bank failures in the first quarter of 2023 in a
perceived flight to safety; and as competition for deposits increased. Core deposits, which we define as all non
time deposits, represented 66.9% of our total deposits at December 31, 2024 compared to 69.1% at
December 31, 2023. We will focus on increasing our core deposits by increasing operating accounts related to
commercial lending activities and enhancing our relationships with our retail customers through the
introduction of new deposit products.
•
Continue expense control. Management continues to focus on controlling our level of non-interest expense
and identifying cost savings opportunities, such as reducing our staffing levels, renegotiating key third-party
contracts and reducing other operating expenses. Our non-interest expense was $36.8 million and $36.4 million
for the years ended December 31, 2024 and 2023, respectively.
•
Manage credit risk to maintain a low level of non-performing assets. We believe that strong asset quality is a
key to long-term financial success. Our strategy for credit risk management focuses on an experienced team of
credit professionals, well-defined and implemented credit policies and procedures, conservative loan
underwriting criteria and active credit monitoring. Our ratio of non-performing loans to total assets was 0.33%
at December 31, 2024, which increased from 0.32% at December 31, 2023.
•
Grow the balance sheet. We intend to again focus on growing the balance sheet. We believe that we will
continue to reap the benefit of a customer base that prefers doing business with a local institution and may be
reluctant to do business with larger institutions. By providing our customers with quality service, a home-town
ambience and local decision making, we expect to return to a period of strong organic growth.
49
Significant Accounting Policies, Critical Accounting Estimates
Our most significant accounting policies are described in Note 1 to the consolidated financial statements. Certain of
these accounting policies require management to use significant judgment and estimates, which can have a material
impact on the carrying value of certain assets and liabilities, and we consider these policies to be our critical accounting
estimates. The judgment and assumptions made are based upon historical experience, future forecasts, or other factors
that management believes to be reasonable under the circumstances. Because of the nature of the judgment and
assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and
results of operations.
The following accounting policies materially affect our reported earnings and financial condition and require
significant judgments and estimates.
Allowance for Credit Losses
The allowance for credit losses is an estimate of current expected credit losses considering available information
relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover
lifetime expected credit losses inherent in financial assets at the balance sheet date. The methodology for determining the
allowance for credit losses is considered a critical accounting policy by management because of the high degree of
judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic
environment that could result in changes to the amount of the recorded allowance for credit losses. The loan portfolio
also represents the largest asset type on the Company’s Consolidated Statements of Financial Condition.
Our methodology for estimating lifetime expected credit losses for our loan portfolio includes the following key
components:
a.
Segmentation of loans into pools that share common risk characteristics;
b. An economic forecast based on the relation of losses with key economic variables for each portfolio segment;
c.
Reversion period to historical loss experience using a straight-line method;
d. Inclusion of qualitative adjustments to consider factors that have not been accounted for, may be changing, or
are, by evidence, expected to change;
e.
Discounted cash flow methodologies to measure credit impairment on each of our loan portfolio segments;
f.
Evaluation of credit losses for loans that do not share similar risk characteristics are estimated on an individual
basis. The lifetime losses for individually measured loans are estimated based on one of several methods,
including the estimated fair value of the underlying collateral, observable market value of similar debt or the
present value of expected cash flows; and
g. The estimation methodologies for credit losses on unfunded lending-related commitments are similar to the
process for estimating credit losses for loans, although with the addition of a probability of draw estimate that
is applied to each loan portfolio segment.
The Company’s allowance for credit losses for loans totaled $8.5 million and $8.1 million as of December 31, 2024
and December 31, 2023, respectively. The $415,000 increase in our allowance for credit losses for loans was primarily
driven by an increase in our collectively evaluated loans, partially offset by a decrease in the allowance for credit losses
on individually analyzed loans.
The quantitative component of our allowance for credit losses on collectively evaluated loans, which is largely
based on a selection of various economic forecasts, decreased by $151,000 as of December 31, 2024, when compared to
December 31, 2023. The decrease was primarily attributable to decreased loan balances of indirect automobile loans and
an update to the Loss Driver Analysis that had a favorable impact on the Multifamily Real Estate Loan probability of
default (“PD”) and loss given default (“LGD”) factors in the CECL model.
The qualitative component of our allowance for credit losses (“ACL”), which is largely based on management’s
judgment of qualitative loss factors, was relatively unchanged during the first half of 2024, but was adjusted in the
second half to account for increased delinquency and higher net charge-offs. The Company’s automobile loan portfolio
50
has continued to experience elevated delinquency rates, and this combined with a simultaneous decrease in collateral
values, has resulted in increases to forecasted net charge-offs. Moderate qualitative adjustments were made to account
for both of these risks. The Company also retained moderated qualitative adjustments related to economic conditions as
inflationary pressures and higher interest rates continue to have an adverse effect on both consumers and businesses.
The following table shows the change in the ACL for collectively evaluated loans:
December 31, 2024
December 31, 2023
Increase/(Decrease)
(In thousands)
Commercial real estate:
Construction . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
—
$
—
Non-residential . . . . . . . . . . . . . . . . . . . . . . . .
$
2,675
$
2,313
$
362
Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
313
$
387
$
(74)
Residential real estate . . . . . . . . . . . . . . . . . . . .
$
575
$
346
$
229
Commercial and industrial . . . . . . . . . . . . . . . .
$
664
$
574
$
90
Consumer:
Indirect automobile . . . . . . . . . . . . . . . . . . . .
$
3,994
$
4,182
$
(188)
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . .
$
84
$
48
$
36
Other consumer . . . . . . . . . . . . . . . . . . . . . . .
$
75
$
58
$
17
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
8,380
$
7,908
$
472
The Company’s allowance for credit losses for collectively evaluated loans totaled $8.4 million as of December 31,
2024, which included nearly $4.0 million of allowance related to indirect automobile loans. In comparison, the
Company’s allowance related to indirect automobile loans totaled nearly $4.2 million as of December 31, 2023, a
reduction of nearly $200,000 from January 1, 2024. The allowance amount attributed to qualitative adjustments at year
end for indirect automobile loans was $1.7 million, an increase of approximately $400,000 from January 1, 2024. As
previously mentioned, actual as well as forecasted increases in delinquencies and net charge-offs for automobile loans
drove management’s increase in qualitative loss factors.
Our allowance for credit losses for individually analyzed loans is determined using the fair value of the collateral,
less estimated selling costs, as applicable. As of December 31, 2024, the Company’s allowance for credit losses on
individually analyzed loans decreased $56,000 from December 31, 2023. This decrease was primarily due to a decrease
of individually analyzed indirect automobile loans, with additional decreases in commercial and commercial real estate
loans also contributing to the overall decrease.
As noted above, we consider a number of variables in our evaluation of the adequacy of the allowance for credit
losses. The most significant variables are portfolio growth and any changing historical loss trends within the specific
business segments. As of December 31, 2024, the $264,000 decrease in our allowance for credit losses reflected the
reduction in indirect automobile loan originations. Based on our model, if all segments of the portfolio grew by an
additional 5% on a year-over-year basis, our allowance for credit losses as of December 31, 2024 would have increased
by $418,000 to $9.0 million, holding all other variables constant. Conversely, if all segment balances of our loan
portfolio had fallen by 5% during the year ended December 31, 2024, our allowance for credit losses would have
decreased by $418,000 to $8.1 million, holding all other variables constant.
The above hypothetical sensitivity calculation reflect the sensitivity of the allowance but lacks other qualitative
adjustments that are part of the quarterly reserving process. As such, this does not necessarily reflect the nature and
extent of future changes in the allowance for reasons including increases or decreases in qualitative adjustments, changes
in the risk profile of the portfolio, changes in the macroeconomic scenario and/or the range of scenarios under
management consideration.
51
Goodwill and Intangible Assets
The assets (including identifiable intangible assets) and liabilities acquired in a business combination are recorded at
fair value at the date of acquisition. Goodwill is recognized as the excess of the acquisition cost over the fair values of
the net assets acquired and is not subsequently amortized. Identifiable intangible assets include customer lists and core
deposit intangibles and are being amortized on a straight-line basis over their estimated lives. Goodwill is not amortized,
but it is tested at least annually, or more frequently if indicators of impairment are present.
Management evaluated goodwill as of October 1, 2024, utilizing various methods including an income approach
that incorporated a discounted cash flow model that involved management assumptions based upon future growth and
earnings projections. A weighted average of the various methods was calculated to determine the estimated fair value of
the reporting unit. The estimated fair value of the reporting unit was then compared to the current carrying value to
determine if impairment had occurred. It is our opinion that, as of the measurement date, the aggregate fair value of the
reporting unit exceeded the carrying value of the reporting unit. Therefore, management concluded that goodwill was not
impaired. Although we believe our assumptions are reasonable, actual results may vary significantly. If for any future
period it is determined that there has been impairment in the carrying value of our goodwill balances, the Company will
record a charge to earnings, which could have a material adverse effect on net income, but not risk-based capital ratios.
Income Taxes
We are subject to the income tax laws of the United States, New York State, and the municipalities in which we
operate. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant government
taxing authorities. We use the asset and liability method of accounting for income taxes. Under this method, deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. See Note 8 to the Consolidated Financial Statements for a
further description of our provision and related income tax assets and liabilities.
In establishing a provision for income tax expense, we must make judgments and interpretations about the
application of these inherently complex tax laws. We must also make estimates about when in the future certain items
will affect taxable income. Disputes over interpretations of the tax laws may be subject to review/adjudication by the
court systems of the various tax jurisdictions or may be settled with the taxing authority upon examination or audit.
If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is
established. We consider the determination of this valuation allowance to be a critical accounting policy because of the
need to exercise significant judgment in evaluating the amount and timing of recognition of deferred tax liabilities and
assets, including projections of future taxable income. These judgments and estimates are reviewed on a continual basis
as regulatory and business factors change.
A valuation allowance for deferred tax assets may be required if the amount of taxes recoverable through loss
carryback declines, or if we project lower levels of future taxable income. Such a valuation allowance would be
established through a charge to income tax expense, which would adversely affect our operating results.
Although management believes that the judgments and estimates used are reasonable, actual results could differ and
we may be exposed to losses or gains that could be material. An unfavorable tax settlement would result in an increase
in our effective income tax rate in the period of resolution. A favorable tax settlement would result in a reduction in our
effective income tax rate in the period of resolution.
52
Selected Financial Data
The following selected consolidated financial data sets forth certain financial highlights of the Company and should
be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this
Annual Report on Form 10-K for 2024 and 2023.
At December 31,
2024
2023
(In thousands)
Selected Financial Condition Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,255,765
$ 1,313,202
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .
37,484
22,129
Securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . .
159,947
191,985
Loans receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
971,779
1,008,851
Bank owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . .
30,193
30,031
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . .
2,401
2,481
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,133,932
1,199,517
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,020,783
1,030,503
Federal Home Loan Bank advances . . . . . . . . . . . . . . . . . .
69,773
128,064
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,155
5,155
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
121,833
$
113,685
For the Year Ended December 31,
2024
2023
(In thousands, except per share data)
Selected Operating Data:
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
63,758
$
60,659
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,527
22,694
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38,231
37,965
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,800
1,702
Net interest income after provision for credit losses . . . . . . . .
35,431
36,263
Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9,520)
5,780
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,848
36,429
(Loss) income before income tax expense . . . . . . . . . . . . . . . .
(10,937)
5,614
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,317)
1,219
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(8,620)
$
4,395
(Loss) earnings per share (diluted). . . . . . . . . . . . . . . . . . . . . . .
$
(0.80)
$
0.40
53
At or For the Year Ended December 31,
2024
2023
Performance Ratios:
(Loss) return on average assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.67)%
0.33 %
(Loss) return on average equity(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7.31)%
4.03 %
Interest rate spread(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.49 %
2.44 %
Net interest margin(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.21 %
3.06 %
Efficiency ratio(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82.34 %
83.28 %
Average interest-earning assets to average interest-bearing liabilities . . . . . . .
133.68 %
133.80 %
Total gross loans to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77.64 %
76.80 %
Equity to assets(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.23 %
8.19 %
Capital Ratios(7):
Tier 1 capital (to adjusted total assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.07 %
10.10 %
Tier I capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.81 %
11.96 %
Total capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.63 %
12.70 %
Common equity Tier 1 capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . .
11.81 %
11.96 %
Asset Quality Ratios:
Allowance for credit losses as a percent of total loans . . . . . . . . . . . . . . . . . . . .
0.88 %
0.81 %
Allowance for credit losses as a percent of non-performing loans . . . . . . . . . .
206.56 %
194.31 %
Net charge-offs to average outstanding loans . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.24)%
(0.21)%
Non-performing loans as a percent of total loans . . . . . . . . . . . . . . . . . . . . . . . .
0.42 %
0.41 %
Non-performing assets as a percent of total assets . . . . . . . . . . . . . . . . . . . . . . .
0.33 %
0.32 %
Other Data:
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10.98
$ 10.27
Number of offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
16
(1) Represents net income divided by average total assets.
(2) Represents net income divided by average equity.
(3) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost
on average interest-bearing liabilities.
(4) Represents net interest income as a percent of average interest-earning assets.
(5) Represents non-interest expense divided by the sum of net interest income and non-interest income.
(6) Represents average equity divided by average total assets.
(7) Capital ratios are for Rhinebeck Bank only. Rhinebeck Bancorp, Inc. is not subject to the minimum consolidated capital
requirements as a small bank holding company with assets less than $3.0 billion.
54
Comparison of Financial Condition at December 31, 2024 and December 31, 2024
Total Assets. Total assets were $1.26 billion at December 31, 2024, representing a decrease of $57.4 million, or
4.4%, compared to $1.31 billion at December 31, 2023. The decrease was primarily due to decreases in: (i) net loans
receivable of $37.1 million, or 3.7%, (ii) available for sale securities of $32.0 million, or 16.7%, (iii) premises and
equipment of $3.5 million, or 19.7%, (iv) Federal Home Loan Bank stock of $2.5 million, or 39.2%, and (v) deferred tax
assets of $1.8 million, or 18.3%. The decrease in total assets was partially offset by an increase in cash and cash
equivalents of $15.4 million, or 69.4%, and an increase in other assets of $4.3 million, or 22.4%
Cash and Cash Equivalents. Cash and cash equivalents grew by $15.4 million, or 69.4%, to $37.5 million as of
December 31, 2024, compared to $22.1 million at December 31, 2023. This increase was mainly driven by higher
deposits at the Federal Reserve Bank of New York and the Federal Home Loan Bank of New York, as cash was
generated from proceeds from maturing loans and securities sales.
Investment Securities Available for Sale. Investment securities available for sale decreased $32.0 million, or
16.7%, to $159.9 million at December 31, 2024 from $192.0 million at December 31, 2023. The decrease was due to
$75.0 million of sales and $32.1 million of paydowns and maturities, partially offset by purchases of $71.4 million and
an unrealized holding gain of $3.7 million. The change in the securities portfolio reflected a balance sheet restructuring
in which the Company sold lower-yielding securities and reinvested the proceeds in higher-yielding securities with a
shorter duration. In September 2024, the Bank sold $58.6 million of available-for-sale securities. The proceeds from
these sales were reinvested into new securities offering yields that were 3.11% higher than those of the securities sold. In
December 2024, the Bank sold an additional $16.4 million of available-for-sale securities. The proceeds from these sales
were reinvested into new securities offering yields that were 3.06% higher than those of the securities sold. The
Company recognized a one-time pre-tax loss of $16.0 million as a result of these transactions.
Net Loans. Net loans receivable were $971.8 million at December 31, 2024, a decrease of $37.1 million, or 3.7%,
as compared to $1.01 billion at December 31, 2023. The decrease was primarily due to a decrease in indirect automobile
loans of $98.6 million, or 25.0%, reflecting a strategic decision to decrease that loan portfolio as a percentage of the
balance sheet. At December 31, 2024, indirect automobile loans were 23.5% of assets, compared to 30.0% at
December 31, 2023. Partially offsetting the decrease in automobile loans were increases in commercial real estate loans
of $54.5 million, or 12.7%, and residential real estate loans of $9.4 million, or 12.2%. The increase in commercial real
estate loans was primarily due to the closing of three large loans secured by a retail shopping center and two hotels
totaling $26.9 million. The increase in residential real estate loans reflected the strategic decision to hold new production
in our portfolio instead of selling these loans.
Allowance for Credit Losses. During the year, the allowance for credit losses increased $415,000, or 5.1%,
reflecting an increase of expected losses in our loan portfolio. Non-accrual loans decreased $47,000, or 1.1%, to $4.1
million at December 31, 2024 from $4.2 million at December 31, 2023. Non-performing assets decreased $72,000, or
1.7%. Non-performing assets included $25,000 in other real estate owned as of December 31, 2023. The Company had
no other real estate owned as of December 31, 2024. Past due loans decreased $2.5 million, or 12.8%, between
December 31, 2023 and December 31, 2024, finishing at $16.7 million, or 1.7%, of total loans, down from $19.2 million,
or 1.9%, of total loans at year-end 2023. The decrease was most notable in non-residential commercial real-estate, as a
few large loans were brought current and one loan was paid off. Our allowance for credit losses was 0.88% of total loans
and 206.56% of non-performing loans at December 31, 2024 as compared to 0.81% of total loans and 194.31% of non-
performing loans at December 31, 2023.
Federal Home Loan Bank Stock. FHLB stock decreased $2.6 million, or 39.2%, to $4.0 million at December 31,
2024, from $6.5 million at December 31, 2023, primarily due to a reduction in additional shares required to support
borrowing activity as advances from the FHLB decreased.
Premises and Equipment. Premises and equipment decreased $3.5 million, or 19.7%, as our former Beacon, New
York branch office was closed, and the property sold during the first quarter of 2024 for $2.9 million.
55
Total Liabilities. Total liabilities decreased $65.6 million, or 5.5%, to $1.13 billion at December 31, 2024 from
$1.20 billion at December 31, 2023 primarily due to a decrease in advances from the FHLB of $58.3 million, or 45.5%
and a decrease in deposits of $9.7 million, or 0.9%, partially offset by an increase in accrued expenses and other
liabilities of $2.3 million, or 8.6%.
Deposits. Deposits decreased $9.7 million, or 0.9%, to $1.02 billion at December 31, 2024 from $1.03 billion at
December 31, 2023. Interest bearing accounts increased $1.9 million, or 0.2%, to $782.7 million while non-interest
bearing balances decreased $11.7 million, or 4.7%, finishing the year at $238.1 million. The increase in interest bearing
accounts represented an increase in time deposits of $19.6 million, or 6.2%, which was offset by a decrease transaction
accounts including NOW, savings and money market accounts of $17.6 million, or 3.8%. The continued growth in time
deposits was primarily due to depositors seeking higher interest rates, which contributed to the decrease in non-interest
bearing and lower interest-bearing deposits.
We participate in reciprocal deposit programs, obtained through the Certificate Deposit Account Registry Service
(CDARS) and IntraFi Cash Service (ICS) networks, that provide access to FDIC-insured deposit products in aggregate
amounts exceeding the current limits for depositors. This allows us to maintain deposits that might otherwise be
uninsured. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $25.4 million and $13.5
million, respectively, at December 31, 2024. At December 31, 2023, we had reciprocal deposits obtained through
CDARS and ICS networks of $23.4 million and $16.7 million, respectively. We had no brokered deposits at
December 31, 2024 and 2023.
Borrowed Funds. Advances from the FHLB decreased $58.3 million, or 45.5%, from $128.1 million at
December 31, 2023 to $69.8 million at December 31, 2024 as proceeds from investment sales were used to pay down
debt.
Stockholders’ Equity. Stockholders' equity increased $8.1 million, or 7.2%, to $121.8 million at
December 31, 2024. The increase was primarily due to a $16.6 million decrease in accumulated other comprehensive
loss reflecting the results of the balance sheet restructuring, which was partially offset by a net loss of $8.6 million. The
Company's ratio of average equity to average assets was 9.23% for the year ended December 31, 2024 and 8.19% for the
year ended December 31, 2023.
Comparison of Operating Results for the Years Ended December 31, 2024 and December 31, 2023
Net Income. Net loss for the year ended December 31, 2024 was $8.6 million, compared to net income of $4.4
million for the year ended December 31, 2023, a decrease of $13.0 million, or 296.1%. Diluted loss per share was $0.80
for the year ended December 31, 2024, compared to diluted earnings per share of $0.40 for the year ended December 31,
2023. The decrease in net income for the year ended December 31, 2024 was primarily due to a balance sheet
restructuring, which resulted in a $16.0 million loss on sale of securities. Net income was also impacted by an increase in
net interest income, an increase in the provision for credit losses and an increase in non-interest expense. Interest and
dividend income increased $3.1 million, or 5.1%, interest expense increased $2.8 million, or 12.5%, and the provision
for credit losses increased $1.1 million, or 64.5%. Non-interest income decreased $15.3 million, reflecting the loss on
securities, while non-interest expenses increased $419,000, or 1.2%, as compared to 2023. Taxes decreased by $3.5
million due to the 2024 net loss, in contrast to the net income in 2023.
Net Interest Income. Net interest income increased $266,000, or 0.7%, to $38.2 million for the year ended
December 31, 2024, as compared to $38.0 million for the year ended December 31, 2023. The increase was primarily
driven by higher yields on interest-earning asset balances, which were partially offset by higher costs on interest-bearing
liability balances. The yield on interest earning assets increased 48 basis points to 5.36% in 2024 from 4.88% in 2023,
primarily due to the rising interest rate environment in 2024. The costs of interest bearing liabilities increased 43 basis
points to 2.87% in 2024 from 2.44% in 2023 driven by increases in general market rates, competitive market forces and
a greater percentage of higher-yielding certificates of deposits and FHLB advances. The interest rate spread increased by
5 basis points to 2.49%. The net interest margin was 3.21% for the year ended December 31, 2024 and 3.06% for the
year ended December 31, 2023. The ratio of average interest-earning assets to average interest-bearing liabilities
decreased 0.9% to 133.68%.
56
Interest Income. Interest income increased $3.1 million, or 5.1%, to $63.8 million for 2024 from $60.7 million for
2023. The increase resulted primarily from increased asset yields, offset by a decrease in the average balance. The
average yield on interest-bearing depository accounts increased to 5.29% for 2024 from 5.19% for 2023. The average
yield on loans increased to 5.91% for 2024 from 5.47% in 2023. The average yields on investment securities increased to
2.14% for 2024 from 1.91% for 2023. Average interest earning assets decreased $52.2 million from $1.24 billion for the
year ended December 31, 2023 to $1.19 billion for the year ended December 31, 2024. The decrease in average interest
earning assets during 2024 compared to 2023 included decreases of $19.3 million in average loan balances and $30.8
million in available for sale securities.
Interest Expense. Interest expense increased $2.8 million, or 12.5%, to $25.5 million for 2024 from $22.7 million
for 2023. This was primarily due to a 43 basis point increase in the overall cost of interest bearing liabilities to 2.87% for
2024 from 2.44% for 2023, partially offset by a decrease in average interest bearing liability balances of $38.3 million,
or 4.1%, year over year. The average balance of the total interest-bearing deposits decreased by $23.8 million, while the
cost increased 52 basis points. The average balance of FHLB advances decreased $13.5 million, while the cost decreased
24 basis points.
Provision for Credit Losses. The Company records a provision for credit losses, which is recognized in earnings.
The Company adopted the CECL model beginning on January 1, 2023, which requires that we make assumptions of
credit quality, macroeconomic factors and conditions, and loan composition which are inherently subjective due to the
use of estimates that are susceptible to significant revision as more information becomes available or as future events
occur. Although we believe that we use the best information available to establish the allowance for credit losses, based
on industry standards and historical experience, future additions to the allowance may be necessary, as a result of
changes in economic conditions and other factors. In addition, the FDIC and NYSDFS, as an integral part of their
examination process, will periodically review our allowance for credit losses. These agencies may require us to
recognize adjustments to the allowance, based on their judgments about information available to them at the time of their
examination.
The Company recorded a provision for credit losses of $2.8 million for the year ended December 31, 2024, an
increase of $1.1 million, or 64.5%, as compared to $1.7 million for the year ended December 31, 2023. Of this $1.1
million increase, $1.1 million is related to the provision for credit losses on loans, while the provision for credit losses on
unfunded commitments decreased $43,000. The increase to the provision was primarily attributable to higher charge-offs
and updates to assumptions on prepayments and other qualitative and quantitative components in our expected credit
loss analysis.
Net charge-offs increased $333,000, or 16.1%, to $2.4 million for the year ended December 31, 2024. The increase
was primarily due to a $291,000 commercial real estate loan charged-off in 2024. Net charge-offs on indirect automobile
loans remained relatively stable at $1.4 million in both 2024 and 2023. The percentage of overdue account balances to
total loans decreased to 1.71% as of December 31, 2024, from 1.90% as of December 31, 2023 and non-performing
assets decreased $72,000, or 1.7%, to $4.1 million at December 31, 2024.
Non-Interest Income. Non-interest loss totaled $9.5 million for the year ended December 31, 2024, a decrease of
$15.3 million, from non-interest income of $5.8 million in 2023, due primarily to the $16.0 million loss on sale of
investment securities resulting from the previously mentioned balance sheet restructuring. The Company recorded an
increase of $368,000, or 31.6%, in investment advisory income resulting from the improved market and economic
conditions, an increase of $192,000 related to gains on life insurance, an increase of $122,000, or 4.2%, in service
charges on deposit accounts, an increase of $86,000, or 12.9%, in the cash surrender value of life insurance, and an
increase in the gain on sales of loans of $42,000, partially offset by a decrease of $64,000 on the disposal of premises
and equipment.
57
Non-Interest Expense. Non-interest expense totaled $36.8 million for the year ended December 31, 2024, an
increase of $419,000, or 1.2%, over 2023. The increase was primarily due to a $913,000 increase in salaries and benefits
primarily due to higher production commissions and higher medical insurance costs, an increase of $33,000 in marketing
expense and a $26,000 increase in data processing costs. These increases were partially offset by the $375,000 write-
down of the Beacon, New York branch in the fourth quarter of 2023, which was sold in the first quarter of 2024. FDIC
deposit insurance and other insurance decreased $127,000, or 10.3%, primarily due to a decreased assessment rate while
other non-interest expense decreased $61,000 primarily due to decreased lending expenses.
Income Taxes. Income tax provision decreased by $3.5 million, or 290.1%, to a net benefit of $2.3 million for
the year ended December 31, 2024 as compared to an expense of $1.2 million for the year ended December 31, 2023,
primarily due to a pre-tax net loss recorded in 2024. Our effective tax rate for the year ended December 31, 2024 was
21.18% compared to 21.71% in 2023. The statutory tax rate was impacted by the benefits derived mainly from tax-
exempt bond income and income received on the bank owned life insurance to arrive at the effective tax rate.
58
Average Balance Sheets for the Years Ended December 31, 2024 and 2023
The following tables set forth average balance sheets, average yields and costs, and certain other information for the
periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average
balances are daily average balances. The yields set forth below include the effect of deferred fees and discounts and
premiums that are amortized or accreted to interest income. Loan balances include loans held for sale. Deferred loan
fees included in interest income totaled $60,000 and $67,000 for the years ended December 31, 2024 and 2023,
respectively.
For the Year Ended December 31,
2024
2023
Average Interest and
Average
Interest and
Balance
Dividends Yield/Cost
Balance
Dividends
Yield/Cost
(Dollars in thousands)
Assets:
Interest bearing depository accounts . . . . . .
$
21,042
$
1,113
5.29 % $
22,612 $
1,173
5.19 %
Loans(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
987,212
58,371
5.91 %
1,006,506
55,077
5.47 %
Available for sale securities . . . . . . . . . . . .
177,214
3,799
2.14 %
208,058
3,964
1.91 %
Other interest-earning assets . . . . . . . . . . . .
4,689
475
10.13 %
5,223
445
8.52 %
Total interest-earning assets . . . . . . . . . . .
1,190,157
63,758
5.36 %
1,242,399
60,659
4.88 %
Non-interest-earning assets . . . . . . . . . . . . . .
88,221
90,389
Total assets . . . . . . . . . . . . . . . . . . . . . . .
$ 1,278,378
$ 1,332,788
Liabilities and equity:
NOW accounts . . . . . . . . . . . . . . . . . . . . . .
$
124,061
$
175
0.14 % $
138,515 $
192
0.14 %
Money market accounts . . . . . . . . . . . . . . .
187,615
4,971
2.65 %
232,666
6,154
2.64 %
Savings accounts . . . . . . . . . . . . . . . . . . . .
141,189
511
0.36 %
161,812
586
0.36 %
Certificates of deposit . . . . . . . . . . . . . . . . .
339,133
15,528
4.58 %
282,838
10,574
3.74 %
Total interest-bearing deposits . . . . . . . . .
791,998
21,185
2.67 %
815,831
17,506
2.15 %
Escrow accounts . . . . . . . . . . . . . . . . . . . . .
9,210
108
1.17 %
10,032
111
1.11 %
Federal Home Loan Bank advances . . . . . .
82,915
3,787
4.57 %
96,409
4,634
4.81 %
Subordinated debt. . . . . . . . . . . . . . . . . . . .
5,155
390
7.57 %
5,155
381
7.39 %
Other interest-bearing liabilities . . . . . . . . .
1,043
57
5.47 %
1,146
62
5.41 %
Total other interest-bearing liabilities . . . . .
98,323
4,342
4.42 %
112,742
5,188
4.60 %
Total interest-bearing liabilities . . . . . . . .
890,321
25,527
2.87 %
928,573
22,694
2.44 %
Non-interest-bearing deposits . . . . . . . . . . .
242,603
268,103
Other non-interest-bearing liabilities . . . . . .
27,515
26,972
Total liabilities . . . . . . . . . . . . . . . . . . . .
1,160,439
1,223,648
Total stockholders’ equity. . . . . . . . . . . . . .
117,939
109,140
Total liabilities and stockholders’ equity . . .
$ 1,278,378
$ 1,332,788
Net interest income . . . . . . . . . . . . . . . . . . .
$
38,231
$
37,965
Interest rate spread . . . . . . . . . . . . . . . . . . .
2.49 %
2.44 %
Net interest margin(2) . . . . . . . . . . . . . . . . .
3.21 %
3.06 %
Average interest-earning assets to
average interest-bearing liabilities . . . . . . . .
133.68 %
133.80 %
(1) Non-accruing loans are included in the outstanding loan balance.
(2) Represents the difference between interest earned and interest paid, divided by average total interest earning assets.
59
Rate/Volume Analysis
The following table presents the effects of changing rates and volumes on our net interest income for the years
indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume).
The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate).
The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and
volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the
changes due to volume. The Company does not have any excludable out-of-period items or adjustments.
Year Ended December 31, 2024
Compared to Year Ended
December 31, 2023
Increase (Decrease)
Due to
Volume
Rate
Net
Interest income:
Interest bearing depository accounts . . . . . . . . . . . . . $
(83) $
23 $
(60)
Loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,072)
4,366
3,294
Available for sale securities . . . . . . . . . . . . . . . . . . . .
(627)
463
(164)
Other interest-earning assets . . . . . . . . . . . . . . . . . . .
(48)
77
29
Total interest-earning assets . . . . . . . . . . . . . . . . . . (1,830)
4,929
3,099
Interest expense:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(524)
4,204
3,680
Escrow accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9)
6
(3)
Federal Home Loan Bank advances . . . . . . . . . . . . .
(625)
(223)
(848)
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
9
9
Other interest-bearing liabilities . . . . . . . . . . . . . . . .
(6)
1
(5)
Total interest-bearing liabilities . . . . . . . . . . . . . . . (1,164)
3,997
2,833
Net (decrease) increase in net interest income . . . . . $
(666) $
932 $
266
In 2024, net interest income increased by $266,000 driven by a $932,000 gain from improved rates, despite a
$666,000 loss from declining volumes. Interest income rose by $3.1 million, with rate increases in loans receivable and
securities offsetting volume losses. Interest expenses increased by $2.8 million due to higher deposit rates, despite
volume declines in deposits and Federal Home Loan Bank advances. Rate improvements were the primary driver of the
overall positive impact, outweighing the negative effects of reduced volumes. The net interest rate spread increased 5
basis points to 2.49% for the year ended December 31, 2024 as compared to 2.44% for the year ended December 31,
2023. Net interest margin increased 15 basis points to 3.21% for 2024 from 3.06% for 2023.
Management of Market Risk
General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form
of market risk is interest rate risk. Our assets, consisting primarily of loans, have longer maturities than our liabilities,
consisting primarily of deposits. As a result, a principal part of our business strategy is to manage our exposure to
changes in market interest rates. Accordingly, the Board of Directors maintains a management-level Asset/Liability
Management Committee (the “ALCO”), which takes initial responsibility for reviewing the asset/liability management
process and related procedures, establishing and monitoring reporting systems and ascertaining that established
asset/liability strategies are being maintained. On at least a quarterly basis, the ALCO reviews and reports asset/liability
management outcomes with the Board of Directors. This committee also implements any changes in strategies and
reviews the performance of any specific asset/liability management actions that have been implemented.
We try to manage our interest rate risk to minimize the exposure of our earnings and capital to changes in market
interest rates. We have implemented the following strategies to manage our interest rate risk: originating loans with
adjustable interest rates, holding more residential mortgage loans in our portfolio, promoting core deposit products and
managing the interest rates and maturities of funding sources, as favorably as possible. By following these strategies, we
believe that we can be better positioned to react to changes in market interest rates.
60
Net Economic Value Simulation. We analyze our sensitivity to changes in interest rates through a net economic
value of equity (“EVE”) model. EVE represents the present value of the expected cash flows from our assets less the
present value of the expected cash flows arising from our liabilities adjusted for the value of off-balance sheet contracts.
The EVE ratio represents the dollar amount of our EVE divided by the present value of our total assets for a given
interest rate scenario. EVE attempts to quantify our economic value using a discounted cash flow methodology while the
EVE ratio reflects that value as a form of capital ratio. We estimate what our EVE would be at a specific date. We then
calculate what the EVE would be at the same date throughout a series of interest rate scenarios representing immediate
and permanent, parallel shifts in the yield curve. We currently calculate EVE under the assumptions that interest rates
increase 100 to 400 basis points from current market rates and that interest rates decrease from 100 to 400 basis points
from current market rates.
The following table presents the estimated changes in our EVE that would result from changes in market interest
rates at December 31, 2024. All estimated changes presented in the table are within the policy limits approved by our
Board of Directors.
Net Economic Value as a
Net Economic Value
Percentage of Assets
Dollar
Dollar
Percent
EVE
Percent
Basis Point Change in Interest Rates
Amount
Change
Change
Ratio
Change
(Dollars in thousands)
400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 133,642 $ (39,731)
(22.9)%
11.64 %
(16.80) %
300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,022 (30,351)
(17.5)%
12.24 %
(12.56) %
200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,913 (20,460)
(11.8)%
12.84 %
(8.25) %
100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,272 (10,101)
(5.8)%
13.44 %
(3.94) %
0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,373
—
— %
13.99 %
— %
(100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,142
769
0.4 %
13.79 %
(1.49) %
(200) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,738
(3,635)
(2.1)%
13.19 %
(5.75) %
(300) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,999 (15,374)
(8.9)%
12.06 %
(13.81) %
(400) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,693 (34,680)
(20.0)%
10.39 %
(25.78) %
The table above shows that in the event of an instantaneous 200 basis point increase in interest rates, our EVE
would decrease by 11.8%; and in the event of an instantaneous 200 basis point decrease in interest rates, our EVE would
decrease by 2.1%. Certain shortcomings are inherent in the methodologies used in the above interest rate risk
measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which
actual yields and costs respond to changes in market interest rates. The table above assumes that the composition of our
interest-sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve
regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an
indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do
not provide a precise forecast of the effect of changes in market interest rates on our EVE and will differ from actual
results.
Liquidity Management
We maintain liquid assets at levels we consider adequate to meet both our short-term and long-term liquidity needs.
We adjust our liquidity levels to fund deposit outflows, repay our borrowings and to fund loan commitments. We also
adjust liquidity as appropriate to meet asset and liability management objectives.
Our primary sources of liquidity are deposits, amortization and prepayment of loans and mortgage-backed
securities, maturities of investment securities and other short-term investments, and earnings and funds provided from
operations, as well as access to FHLB advances and other borrowings. While scheduled principal repayments on loans
and mortgage-backed securities are a relatively predictable source of funds, deposit flows, loan sales and prepayments
are greatly influenced by market interest rates, economic conditions, interest rate risk management and rates offered by
our competition. We set the interest rates on our deposits in an attempt to maintain a desired level of total deposits.
61
As reported in the Consolidated Statements of Cash Flows, our cash flows are classified for financial reporting
purposes as operating, investing, or financing cash flows. Net cash provided by operating activities was $8.5 million and
$7.0 million for the years ended December 31, 2024 and 2023, respectively. These amounts differ from our net income
because of certain cash receipts and disbursements that did not affect net income for the respective periods. Net cash
provided by investing activities was $74.7 million in 2024 as compared to $14.7 million in 2023. Net cash provided by
investing activities principally reflects our investment security and loan activities in the respective periods. Net cash
inflows of $33.4 million for a decrease in loans was the primary contributor to the cash provided by investing activities
for the year ended December 31, 2024, as loans increased $16.2 million in 2023. Deposit and borrowing cash flows have
traditionally comprised most of our financing activities, which resulted in a net cash outflow $67.9 million in the year
ended December 31, 2024, as compared to $31.0 million in fiscal year 2023.
At December 31, 2024, we had the following main sources of availability of liquid funds and borrowings:
(In thousands)
Total
Available liquid funds:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
37,484
Unencumbered securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,002
Availability of borrowings:
Zions Bank line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,000
Pacific Coast Bankers Bank line of credit . . . . . . . . . . . . . . . . . . . . . . .
50,000
FHLB secured line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
236,637
FRB secured line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
215,573
Total available sources of funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
613,696
The Bank has access to a preapproved secured line of credit with the FHLB not to exceed $627.3 million at
December 31, 2024. Additional funds available under this line are not included in the table above as we do not consider
it to be as readily accessible as the funds above.
The following table summarizes our main contractual obligations and other commitments to make future payments
as of December 31, 2024. The amount of the obligations presented in the table reflect principal amounts only and
exclude the amount of interest we are obligated to pay. Also excluded from the table are a number of obligations to be
settled in cash. These excluded items are reflected in our consolidated balance sheet and include deposits with no stated
maturity, trade payables, and accrued interest payable.
December 31, 2024
(In thousands)
Total
One Year or
Less
After One but
within Five
Years
After 5 Years
Payments Due:
Federal Home Loan Bank advances . . . . . . . . . . . . . . .
$
69,773
$
46,450
$
23,323
$
—
Operating lease agreements . . . . . . . . . . . . . . . . . . . . . .
10,443
757
2,872
6,814
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,155
—
—
5,155
Time deposits with stated maturity dates . . . . . . . . . . .
337,639
288,303
49,336
—
Total contractual obligations . . . . . . . . . . . . . . . . . . . . . .
$
423,010
$
335,510
$
75,531
$
11,969
Off-Balance Sheet Arrangements. In the normal course of operations, we engage in a variety of financial
transactions that, in accordance with generally accepted accounting principles (“GAAP”) are not recorded in our
financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk.
Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments
and lines of credit. For information about our loan commitments, letters of credit and unused lines of credit, see Note 11
to the Consolidated Financial Statements. For 2024, we did not engage in any off-balance-sheet transactions other than
loan origination commitments and standby letters of credit in the normal course of our lending activities.
62
Impact of Inflation and Changing Prices
The financial statements and related notes of the Company have been prepared in accordance with United States
GAAP. GAAP generally requires the measurement of financial position and operating results in terms of historical
dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The
impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and
liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on
performance than the effects of inflation.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
For information regarding market risk, see “Item 7. Management’s Discussion and Analysis of Financial Conditions
and Results of Operation — Management of Market Risk.”
Item 8. Financial Statements and Supplementary Data
The Financial Statements are included beginning on page F-1 of this annual report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our management, including our Principal Executive Officer
and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of
the fiscal year (the “Evaluation Date”). Based upon that evaluation, the Principal Executive Officer and
Principal Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures
were effective.
(b) Management’s Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining effective internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the
participation of our management, including our Principal Executive Officer and Principal Financial Officer, we
evaluated the effectiveness of our internal control over financial reporting based on criteria established in
“Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). Based on this assessment, management, including our Principal Executive
Officer and Principal Financial Officer, concluded that our internal control over financial reporting was
effective and met the criteria of the “Internal Control — Integrated Framework (2013)” as of December 31,
2024.
(c) Attestation Report of the Registered Public Accounting Firm.
Not applicable because the Company is a non-accelerated filer.
63
(d) Changes in Internal Controls.
There were no changes in our internal control over financial reporting that occurred during the fourth quarter of
fiscal 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
Item 9B. Other Information
Trading arrangements of Section 16 Reporting Persons.
During the quarter ended December 31, 2024, no person who is required to file reports pursuant to Section
16(a) of the Securities and Exchange Act of 1934, as amended, with respect to holdings of, and transactions in, the
Company’s common shares (i.e. directors and certain officers of the Company) maintained, adopted, modified or
terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1(c) arrangement”, as those terms are defined in
Section 229.408 of the regulations of the SEC.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
64
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information regarding directors, executive officers and corporate governance of the Company is presented under the
headings “Other Information Relating to Directors and Executive Officers — Delinquent Section 16(a) Reports
Compliance,” “Proposal 1 — Election of Directors,” “Corporate Governance — Code of Ethics for Senior Officers,”
“— Committees of the Board of Directors — Audit Committee” and “— Insider Trading Policy and Arrangements” in
the Company’s definitive Proxy Statement for the 2025 Annual Meeting of Stockholders (the “Proxy Statement”) and is
incorporated herein by reference.
A copy of the Code of Ethics for Senior Officers is available to shareholders of the “Investor Relations” portion of
the Bank’s website of www.rhinebeckbank.com.
Item 11. Executive Compensation
Information regarding executive compensation is presented under the headings “Executive Compensation” and
“Director Compensation” in the Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information regarding security ownership of certain beneficial owners and management is presented under the
heading “Stock Ownership” in the Proxy Statement and is incorporated herein by reference.
The equity compensation plan information is presented under the heading “Proposal 2 – The approval of the
Rhinebeck Bancorp, Inc. 2025 Equity Incentive Plan” in the Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding certain relationships and related transactions, and director independence is presented under
the heading “Corporate Governance — Director Independence” and “Other Information Relating to Directors and
Executive Officers — Transactions with Certain Related Persons” in the Proxy Statement and is incorporated herein by
reference.
Item 14. Principal Accounting Fees and Services
Information regarding principal accounting fees and services is presented under the heading “Proposal 2 —
Ratification of the Appointment of Independent Registered Public Accountants” in the Proxy Statement and is
incorporated herein by reference.
65
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(1)
Financial Statements
The following documents are filed as part of this annual report on Form 10-K.
(A)
Reports of Independent Registered Public Accounting Firms
(B)
Consolidated Statements of Financial Condition — at December 31, 2024 and 2023
(C)
Consolidated Statements of Income - Years ended December 31, 2024 and 2023
(D)
Consolidated Statements of Comprehensive Income — Years ended December 31, 2024 and 2023
(E)
Consolidated Statements of Changes in Stockholders’ Equity — Years ended December 31, 2024
and 2023
(F)
Consolidated Statements of Cash Flows — Years ended December 31, 2024 and 2023
(G)
Notes to the Consolidated Financial Statements
(a)(2)
Financial Statement Schedules
None.
(a)(3)
Exhibits
3.1
Articles of Incorporation of Rhinebeck Bancorp, Inc. (Incorporated by reference to the Registration
Statement on Form S-1 of Rhinebeck Bancorp, Inc. (File no. 333-227266), originally filed with the
Securities and Exchange Commission on September 10, 2018.)
3.2
Amended and Restated Bylaws of Rhinebeck Bancorp, Inc. (Incorporated by reference to the
Rhinebeck Bancorp, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 27, 2019)
4.1
Form of Common Stock Certificate of Rhinebeck Bancorp, Inc. (Incorporated by reference to the
Registration Statement on Form S-1 of Rhinebeck Bancorp, Inc. (File no. 333-227266), originally
filed with the Securities and Exchange Commission on September 10, 2018.)
4.2
Indenture, dated as of March 30, 2005, by and between Rhinebeck Bancorp, MHC, as Issuer, and
Wilmington Trust Company, as Trustee (Incorporated by reference to Rhinebeck Bancorp, Inc.’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23,
2019)
4.3
First Supplemental Indenture, dated as of January 16, 2019, by and among Wilmington Trust
Company, as Trustee, Rhinebeck Bancorp, Inc. and Rhinebeck Bancorp, MHC (Incorporated by
reference to Rhinebeck Bancorp, Inc.’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 23, 2019)
4.4
Description of Rhinebeck Bancorp, Inc.’s Securities (Incorporated by reference to Exhibit 4.4 to
Rhinebeck Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019,
filed with the Securities and Exchange Commission on March 26, 2020)
10.1*
Retirement Separation Agreement dated effective as of March 21, 2025, by and among Rhinebeck
Bancorp, Inc., Rhinebeck Bank, and Michael J. Quinn, (Incorporated by reference to Rhinebeck
Bancorp, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on
March 21, 2025)
10.2*
Employment Agreement between Rhinebeck Bank and Jamie J. Bloom (Incorporated by reference to
the Registration Statement on Form S-1 of Rhinebeck Bancorp, Inc. (File no. 333-227266),
originally filed with the Securities and Exchange Commission on September 10, 2018)
10.3*
Supplemental Executive Retirement Agreement between Rhinebeck Bank and Michael J. Quinn
dated January 1, 2008 (Incorporated by reference to the Registration Statement on Form S-1 of
Rhinebeck Bancorp, Inc. (File no. 333-227266), originally filed with the Securities and Exchange
Commission on September 10, 2018)
10.4*
Rhinebeck Bank Split Dollar Life Insurance Plan (Incorporated by reference to the Registration
Statement on Form S-1 of Rhinebeck Bancorp, Inc. (File no. 333-227266), originally filed with the
Securities and Exchange Commission on September 10, 2018)
10.5*
Rhinebeck Bank Executive Short-Term Incentive and Retention Plan (Incorporated by reference to
the Registration Statement on Form S-1 of Rhinebeck Bancorp, Inc. (File no. 333-227266),
originally filed with the Securities and Exchange Commission on September 10, 2018)
66
10.6*
Rhinebeck Bank Executive Long-Term Incentive and Retention Plan (Incorporated by reference to
the Registration Statement on Form S-1 of Rhinebeck Bancorp, Inc. (File no. 333-227266),
originally filed with the Securities and Exchange Commission on September 10, 2018)
10.7*
New Director Fee Continuation Agreement between Rhinebeck Bank and Frederick Battenfeld dated
January 1, 2008 (Incorporated by reference to the Registration Statement on Form S-1 of Rhinebeck
Bancorp, Inc. (File no. 333-227266), originally filed with the Securities and Exchange Commission
on September 10, 2018)
10.8*
New Director Fee Continuation Agreement between Rhinebeck Bank and William C. Irwin dated
January 1, 2008 (Incorporated by reference to the Registration Statement on Form S-1 of Rhinebeck
Bancorp, Inc. (File no. 333-227266), originally filed with the Securities and Exchange Commission
on September 10, 2018)
10.9*
New Director Fee Continuation Agreement between Rhinebeck Bank and Louis Tumolo, Jr. dated
January 1, 2008 (Incorporated by reference to the Registration Statement on Form S-1 of Rhinebeck
Bancorp, Inc. (File no. 333-227266), originally filed with the Securities and Exchange Commission
on September 10, 2018)
10.10*
Change in Control Agreement between Rhinebeck Bank and Kevin Nihill (Incorporated by
reference to Rhinebeck Bancorp, Inc.’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on June 25, 2024)
10.11*
Rhinebeck Bancorp, Inc. 2020 Equity Incentive Plan (Incorporated by reference to Appendix A to
the Proxy Statement for the 2020 Annual Meeting of Stockholders, filed with the Securities and
Exchange Commission on April 21, 2020)
10.12*
Form of Restricted Stock Award Agreement (Incorporated by reference to the Registration
Statement on Form S-8 (File no. 333-239811), filed with the Securities and Exchange Commission
on July 10, 2020)
10.13*
Form of Incentive Stock Option Award Agreement (Incorporated by reference to the Registration
Statement on Form S-8 (File no. 333-239811), filed with the Securities and Exchange Commission
on July 10, 2020)
10.14*
Form of Non-Qualified Stock Option Award Agreement (Incorporated by reference to the
Registration Statement on Form S-8 (File no. 333-239811), filed with the Securities and Exchange
Commission on July 10, 2020)
19
Rhinebeck Bancorp, Inc, Insider Trading Policy
21
Subsidiaries of Registrant
23.1
Consent of Wolf & Company, P.C.
31.1
Certification required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
97
Rhinebeck Bancorp, Inc. Clawback Policy (Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange
Commission on March 26, 2024)
101
The following materials from the Annual Report on Form 10-K of Rhinebeck Bancorp, Inc. for the
year ended December 31, 2024, formatted in inline XBRL (Extensible Business Reporting
Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of
Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of
Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated
Financial Statements
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Denotes a compensatory plan or agreement.
Item 16. Form 10-K Summary
None.
F-1
Rhinebeck Bancorp, Inc. and Subsidiary
Table of Contents
December 31, 2024 and 2023
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 392) . . . . . . . . . . . . . . . . . . . . . . . .
F-2
Consolidated Financial Statements
Consolidated Statements of Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-4
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-5
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-6
Consolidated Statements of Changes in Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-7
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-8
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-9
F-2
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Rhinebeck Bancorp, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Rhinebeck Bancorp, Inc. and
subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income,
comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the years then ended, and the
related notes to the consolidated financial statements (collectively, the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2024 and 2023, and the results of its operations and its cash flows for each of the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate
opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Allowance for Credit Losses – Loans Evaluated on a Pooled Basis
Critical Audit Matter Description
As described in Notes 1 and 3 to the financial statements, the Company has recorded an allowance for credit losses
(ACL) for its loan portfolio in the amount of $8.5 million as of December 31, 2024, representing management’s estimate
F-3
of credit losses over the remaining expected life of the Company’s loan portfolio as of that date. Management
determined the amounts, and corresponding provision for credit loss expense for the year, pursuant to the application of
Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses.
The Company incorporates the use of third-party software to arrive at an expected life-of-loan loss amount based on a
discounted cash flow estimate at the loan level. The amount and timing of cash flows is determined using assumptions
for probability of default and loss given default (PD/LGD); expected term; and forecasted economic factors. The results
of these calculations are then qualitatively adjusted by management based on pool-specific attributes. We determined
that performing procedures relating to these components of the Company’s methodology is a critical audit matter.
The principal considerations for our determination are (i) the application of significant judgment and estimation on the
part of management, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures
and evaluating audit evidence obtained, and (ii) significant audit effort was necessary in evaluating management’s
methodology, significant assumptions and calculations.
How the Critical Audit Matter Was Addressed in the Audit
Addressing the above matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included, among others, the following:
•
Evaluating the segmentation of loans into pools with similar risk characteristics.
•
Testing assumptions used in the calculation of discounted cash flows, including prepayment speeds and
expected loan terms.
•
Testing management’s process for determining the qualitative reserve components.
•
Testing the completeness and accuracy of data used in the model.
/s/ Wolf & Company, P.C.
Boston, Massachusetts
March 25, 2025
F-4
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
(In thousands, except share and per share data)
December 31,
2024
2023
Assets
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
18,561 $
14,178
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,309
7,524
Interest bearing depository accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
614
427
Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,484
22,129
Available for sale securities (at fair value) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
159,947
191,985
Loans receivable (net of allowance for credit losses of $8,539 and $8,124, respectively) . . . . .
971,779 1,008,851
Federal Home Loan Bank stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,960
6,514
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,435
4,616
Cash surrender value of life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,193
30,031
Deferred tax assets (net of valuation allowance of $1,336 and $598, respectively) . . . . . . .
8,114
9,936
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,105
17,567
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
25
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,235
2,235
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
166
246
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,347
19,067
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,255,765 $ 1,313,202
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Non-interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 238,126 $ 249,793
Interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
782,657
780,710
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,020,783 1,030,503
Mortgagors’ escrow accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,425
9,274
Advances from the Federal Home Loan Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69,773
128,064
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,155
5,155
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,796
26,521
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,133,932 1,199,517
Stockholders’ Equity
Preferred stock (par value $0.01 per share; 5,000,000 authorized, no shares issued) . . . . .
—
—
Common stock (par value $0.01; authorized 25,000,000; issued and outstanding
11,094,828 and 11,072,607 at December 31, 2024 and 2023, respectively) . . . . . . . . . . . . . . . . .
111
111
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,946
45,959
Unearned common stock held by the employee stock ownership plan . . . . . . . . . . . . . . . .
(3,055)
(3,273)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91,766
100,386
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities, net of taxes . . . . . . . . . . . . . . . . . . . . .
(10,480)
(26,077)
Defined benefit pension plan, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,455)
(3,421)
Total accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,935)
(29,498)
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121,833
113,685
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,255,765 $ 1,313,202
See accompanying notes to consolidated financial statements
F-5
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(In thousands, except share and per share data)
Years Ended December 31,
2024
2023
Interest and Dividend Income
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
58,371 $
55,077
Interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,274
4,409
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,113
1,173
Total interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,758
60,659
Interest Expense
Interest expense on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,294
17,617
Interest expense on borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,233
5,077
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,527
22,694
Net interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38,231
37,965
Provision for Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,800
1,702
Net interest income after provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,431
36,263
Non-interest (Loss) Income
Service charges on deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,002
2,880
Net realized loss on sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16,041)
—
Net gain on sales of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
160
118
Increase in cash surrender value of life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
751
665
Net gain from sale of other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
—
Net (loss) gain on disposal of premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18)
46
Gain on life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
413
221
Investment advisory income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,532
1,164
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
677
686
Total non-interest (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9,520)
5,780
Non-interest Expense
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,372
19,459
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,266
4,256
Data processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,041
2,015
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,930
1,919
Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
588
555
FDIC deposit insurance and other insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,105
1,232
Other real estate owned expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
3
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
88
Write-down on branch held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
375
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,466
6,527
Total non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,848
36,429
Net (loss) income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,937)
5,614
Net (Benefit) Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,317)
1,219
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(8,620) $
4,395
Earnings (loss) per common share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(0.80) $
0.41
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(0.80) $
0.40
Weighted average shares outstanding, basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,757,750 10,789,009
Weighted average shares outstanding, diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,757,750 10,855,552
See accompanying notes to consolidated financial statements
F-6
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
Years Ended December 31,
2024
2023
Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (8,620)
$
4,395
Other Comprehensive Income
Unrealized holding gains arising during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,702
2,676
Reclassification adjustment for (gains) or losses included in net realized gains or
losses on sales of securities on the consolidated statements of income . . . . . . . . . . . . . . . . . . 16,041
—
Net unrealized gains on available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,743
2,676
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,146)
(562)
Unrealized gains on available for sale securities, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . 15,597
2,114
Defined benefit pension plan:
Actuarial gains arising during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
925
356
Reclassification adjustment for amortization of net actuarial gain . . . . . . . . . . . . . . . . . . . . .
298
374
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,223
730
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(257)
(153)
Defined benefit pension plan gains, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
966
577
Other comprehensive income: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,563
2,691
Total Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7,943 $
7,086
See accompanying notes to consolidated financial statements
F-7
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders’ Equity
(Dollars in thousands)
Unearned
Accumulated
Additional
Common
Other
Common
Paid-in
Stock Held
Retained
Comprehensive
Stock Capital
by the ESOP Earnings
Loss
Total
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . .
$
113
$ 47,075
$
(3,491)
$ 96,624
$
(32,189)
$ 108,132
Cumulative effect of change in accounting
principle (ASU 2016-13), net of tax . . . . . . . . . . . . .
$
—
$
—
$
—
$
(633)
$
—
$
(633)
Balance at January 1, 2023 as adjusted for
change in accounting principle . . . . . . . . . . . . . . . . . . .
$
113
$ 47,075
$
(3,491)
$ 95,991
$
(32,189)
$ 107,499
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
4,395
—
4,395
Other comprehensive income . . . . . . . . . . . . . . . . . .
—
—
—
—
2,691
2,691
ESOP shares committed to be allocated . . . . . . . . . . .
—
(56)
218
—
—
162
Share-based compensation expense . . . . . . . . . . . . .
—
396
—
—
—
396
Repurchase of common stock . . . . . . . . . . . . . . . . . .
(2)
(1,378)
—
—
—
(1,380)
Share redemption for tax withholding on
restricted stock vesting . . . . . . . . . . . . . . . . . . . . . . .
—
(78)
—
—
—
(78)
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . .
$
111
$ 45,959
$
(3,273)
$ 100,386
$
(29,498)
$ 113,685
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
(8,620)
—
(8,620)
Other comprehensive income . . . . . . . . . . . . . . . . . .
—
—
—
—
16,563
16,563
ESOP shares committed to be allocated . . . . . . . . . . .
—
(32)
218
—
—
186
Share-based compensation expense . . . . . . . . . . . . . .
—
19
—
—
—
19
Balance at December 31, 2024 . . . . . . . . . . . . . . . . .
$
111
$ 45,946
$
(3,055)
$ 91,766
$
(12,935)
$ 121,833
See accompanying notes to consolidated financial statements
F-8
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Dollars in thousands, except share and per share data)
Year Ended December 31,
2024
2023
Cash Flows from Operating Activities
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(8,620)
$
4,395
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization and accretion of premiums and discounts on investments, net. . . . . . . . . . . . . . . . . . . . . .
45
281
Net realized loss on sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,041
—
Net realized gain on sale of other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
—
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,800
1,702
Loans originated for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,757)
(5,420)
Proceeds from sale of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,825
4,877
Net gain on sale of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(160)
(118)
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
88
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,343
1,404
Write-down on branch held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
375
Net loss (gain) from disposal of premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
(46)
Deferred income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,581)
(352)
Increase in cash surrender value of insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(751)
(665)
Gain on life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(413)
(221)
Net decrease in accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
181
(361)
Expense of earned ESOP shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
186
162
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
396
Net increase in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,280)
(1,398)
Net increase in accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,498
1,949
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,470
7,048
Cash Flows from Investing Activities
Proceeds from sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74,987
—
Proceeds from maturities and principal repayments of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32,137
34,069
Purchases of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(71,429)
—
Net purchases of FHLB Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,554
(3,256)
Net decrease (increase) in loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,364
(16,157)
Purchases of bank owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23)
(23)
Purchases of bank premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(791)
(578)
Proceeds from disposal of premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,892
—
Net proceeds from life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,025
672
Proceeds from sale of other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
(25)
Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74,745
14,702
Cash Flows from Financing Activities
Net decrease in demand deposits, NOW, money market and savings accounts . . . . . . . . . . . . . . . . . . . . .
(29,313)
(201,094)
Net increase in time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19,593
101,664
Net increase (decrease) in mortgagors' escrow accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
151
(458)
Net (decrease) increase. in short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(33,550)
28,727
Net (decrease) increase in long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(24,741)
41,614
Stock repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(1,458)
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(67,860)
(31,005)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,355
(9,255)
Cash and Cash Equivalents
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,129
31,384
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
37,484
$
22,129
Supplemental Disclosures of Cash Flow Information
Cash paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
26,078
$
21,976
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
874
$
1,501
See accompanying notes to consolidated financial statements
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-9
1. Nature of Business and Significant Accounting Policies
The consolidated financial statements include accounts of Rhinebeck Bancorp, Inc. (the “Company”), a stock
holding company, and its wholly-owned subsidiary, Rhinebeck Bank (the “Bank”), a New York chartered stock savings
bank and its wholly-owned subsidiaries. The primary purpose of the Company is to act as a holding company for the
Bank. The Bank provides a full range of banking and financial services to consumer and commercial customers through
its thirteen branches and two representative offices located in Dutchess, Ulster, Orange, and Albany counties. Certain
financial services including investment advisory and financial product sales are offered through a division of the Bank
doing business as Rhinebeck Asset Management (“RAM”).
In the first quarter of 2024, the Bank sold the Bank’s Beacon branch office in Wappingers Falls, New York, for $2.9
million to Heritage Financial Credit Union, a New York chartered credit union. The sale included the land and building
as well of all branch premises and equipment. All of the branch accounts were redomiciled to the customer’s nearest
branch and all employees were placed in open positions. An impairment expense of $375,000 was taken on the property
in December 2023.
A description of the Company’s significant accounting policies are presented below.
Basis of Financial Statements Presentation
The consolidated financial statements have been prepared in accordance with generally accepted accounting
principles (“GAAP”) and general practices within the banking industry. In preparing the consolidated financial
statements, management is required to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities, as of the date of the consolidated statements of financial
condition and reported amounts of revenues and expenses for the reporting period. Actual results could differ from those
estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the
determination of the allowance for credit losses, the evaluation of goodwill for impairment and the valuation of deferred
tax assets.
The Company has evaluated subsequent events for potential recognition and/or disclosure through the date these
financial statements were issued.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
Significant Group Concentrations of Credit Risk
Most of the Company’s activities are with customers located in the New York State counties of Dutchess, Ulster,
Orange, and Albany. The Company does not have any significant concentrations to any one industry or customer.
Although the Company has a diversified loan portfolio, the ability of its customers to repay their loans is substantially
dependent on the economic conditions in the market areas in which the Company operates.
Cash and Cash Equivalents
Cash and due from banks and federal funds sold are recognized as cash equivalents in the consolidated statements of
financial condition and cash flows. Federal funds sold generally mature in one day. The Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-10
Investment in Debt Securities
Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to
maturity” and are recorded at amortized cost. “Trading” securities, if any, are carried at fair value, with unrealized gains
and losses recognized in earnings. Securities not classified as held to maturity or trading are classified as “available for
sale” and are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in
accumulated other comprehensive loss, net of taxes. Purchase discounts are recognized in interest income using the
interest method over the contractual terms of the security. Purchase premiums are recognized in interest income using
the interest method to the instrument’s earliest call date. Realized gains and losses on the sale of securities are recorded
on the trade date and are determined using the specific identification method.
The Company evaluates securities in an unrealized loss position for impairment related to credit losses on at least a
quarterly basis. Securities in unrealized loss positions are first assessed as to whether we intend to sell, or if it is more
likely than not that we will be required to sell the security before recovery of its amortized cost basis. If one of the
criteria is met, the security’s amortized cost basis is written down to fair value through current earnings. For securities
that do not meet these criteria, the Company evaluates whether the decline in fair value resulted from credit losses or
other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to
be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to
be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is
recorded, limited to the amount that the fair value of the security is less than its amortized cost basis.
Investment in FHLB Stock
The Company is required to maintain an investment in FHLB capital stock, as collateral, in an amount equal to a
certain percentage of its outstanding debt. FHLB stock is considered restricted stock and is carried at cost.
Loans Receivable
Loans that the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff
generally are reported at their outstanding unpaid principal balances adjusted for unearned income, including any
allowance for credit losses and any unamortized deferred fees or costs.
Interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct
origination costs, are deferred and amortized using the interest method over the respective term of the loan.
The accrual of interest on loans is discontinued at the time the loan is 90 days past due. Consumer, automobile and
installment loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms
of the loan. In all cases, loans are placed on non-accrual status or charged-off at an earlier date if collection of principal
or interest is considered doubtful. All interest accrued, but not collected, for loans that are placed on non-accrual status
or charged off, is reversed against interest income. The interest on these loans is not recognized until the loan returns to
accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are
brought current and future payments are reasonably assured.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-11
Allowance for Credit Losses
The Allowance for Credit Losses (“ACL”) on loans is management’s estimate of expected credit losses over the
expected life of the loans at the reporting date. The ACL on loans is increased through a provision for credit losses
recognized in the Consolidated Statements of Income and by recoveries of amounts previously charged off. The ACL on
loans is reduced by charge-offs on loans. Loan charge-offs are recognized when management believes the collectability
of the principal balance outstanding is unlikely. Full or partial charge-offs on individually analyzed loans are generally
recognized when the collateral or future cash flows are deemed to be insufficient to support the carrying value of the
loan.
The level of the ACL on loans is based on management’s ongoing review of relevant information, from internal and
external sources, relating to past events, current conditions and reasonable and supportable economic forecasts.
Historical credit loss experience provides the basis for the calculation of loss given default and the estimation of
expected credit losses. As discussed further below, adjustments to historical information are made for differences in
specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency levels, or terms, as
well as for changes in economic conditions, that may not be reflected in historical loss rates.
Management estimates the ACL on loans using both quantitative and qualitative factors. The methodology for
evaluating quantitative factors consists of two basic components. The first component involves pooling loans into
portfolio segments for loans that share similar risk characteristics. Pooled loan portfolio segments include commercial
construction, commercial real estate, multi-family, commercial and industrial, residential real estate (including
homeowner construction), home equity, indirect automobile and other consumer loans. The second component involves
individually analyzed loans that do not share similar risk characteristics with loans that are pooled into portfolio
segments or are determined for foreclosure.
Loans not included in the pooled loans and that have generally aged into a non-accrual status are individually
analyzed loans for which the ACL is measured using a discounted cash flow (“DCF”) methodology based upon the
loan’s contractual effective interest rate, or, if the loan is collateral-dependent, at the fair value of the collateral. Factors
management considers when measuring the extent of expected credit loss include payment status, collateral value,
borrower financial condition, guarantor support and the probability of collecting scheduled principal and interest
payments when due. For collateral-dependent loans for which repayment is to be provided substantially through the sale
of the collateral, management adjusts the fair value for estimated costs to sell. Management may also adjust appraised
values to reflect estimated market value declines or apply other discounts to appraised values for unobservable factors
resulting from its knowledge of circumstances associated with the collateral.
For pooled loans, the Company utilizes a DCF methodology to estimate credit losses over the expected life of the
loans. The life of the loan excludes expected extensions, renewals and modifications. Management utilizes the national
unemployment rate as an econometric factor with a one-year forecast period and one-year straight-line reversion period
to the historical mean of its macroeconomic assumption in order to estimate the probability of default for each loan
portfolio segment. The DCF methodology combines the probability of default, the loss given default, maturity date and
prepayment speeds to estimate a reserve for each loan. The sum of all the loan level reserves is aggregated for each
portfolio segment and a loss rate factor is derived.
Because the methodology is based upon historical experience and trends, current economic data, reasonable and
supportable economic forecasts, as well as management’s judgment, factors may arise that result in different estimations.
Deteriorating conditions or assumptions could lead to further increases in the ACL on loans. In addition, various
regulatory agencies periodically review the ACL on loans. Such agencies may require additions to the allowance based
on their judgments about information available to them at the time of their examination. The ACL on loans is an
estimate, and ultimate losses may vary from management’s estimate.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-12
The Company made an accounting policy election to exclude accrued interest from the amortized cost basis of
loans. In addition, the Company elected not to measure an allowance for credit losses for accrued interest receivable,
because a timely write-off policy exists. The policy generally requires loans to be placed on non-accrual status when
principal or interest is 90 days or more past due unless the loan is well-secured and in the process of collection. When a
loan is placed on non-accrual status, accrued interest is reversed against interest income.
The ACL on unfunded commitments is management’s estimate of expected credit losses over the expected
contractual term (or life) in which the Company is exposed to credit risk via a contractual obligation to extend credit
unless that obligation is unconditionally cancellable by the Company. For each portfolio, estimated loss rates and
funding factors are applied to the corresponding balance of unfunded commitments. For each portfolio, the estimated
loss rates applied to unfunded commitments are the same quantitative and qualitative loss rates applied to the
corresponding on-balance sheet amounts in determining the ACL on loans. The estimated funding factor applied to
unfunded commitments represents the likelihood that the funding will occur and is based upon the Company’s average
historical utilization rate for each portfolio.
The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk
characteristics relevant to each portfolio segment are as follows:
Commercial non-residential real estate. Loans in this segment are primarily income-producing properties
throughout the Hudson Valley. We evaluate the qualifications, income level and financial condition of the borrower,
including cash flows, credit history, management expertise, as well as the value and condition of the property securing
the loan. The underlying cash flows generated by the properties can be adversely impacted by a downturn in the
economy as evidenced by increased vacancy rates, which in turn, can have an effect on the credit quality in this segment.
Management periodically obtains rent rolls and continually monitors the cash flows of these loans.
Multi-family. This segment consists of real estate loans secured by properties of five or more rental units within our
market area. We consider a number of factors in originating multi-family loans. We evaluate the qualifications, income
level and financial condition of the borrower, including cash flows, credit history, management expertise, as well as the
value and condition of the property securing the loan. The underlying cash flows generated by the properties can be
adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in
turn, would have an effect on the credit quality of this segment. Management obtains financial information and
continually monitors the cash flows of these loans.
Construction and land development. Loans in this segment primarily include real estate development loans for
which payment is derived from sale of the property or long term financing at completion. Credit risk is affected by cost
overruns, completion delays, time to sell at an adequate price, and market conditions.
Residential real estate. All loans in this segment are collateralized by owner-occupied residential real estate and
repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including
unemployment rates and housing prices, will have an effect on the credit quality in this segment. Generally we will
originate loans with a loan-to-value ratio of up to 80% of the appraised value. Loans with loan-to-value ratios greater
than 80% require the purchase of private mortgage insurance.
Commercial. Loans in this segment are made to businesses and are generally secured by assets of the business.
Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer
spending, will have an effect on the credit quality in this segment.
Indirect Automobile. All loans in this segment are secured by motor vehicles, which can depreciate rapidly. Loan
collectability is dependent on the credit quality of the individual borrower. The overall health of the economy, including
unemployment rates, will have an effect on the credit quality of this segment.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-13
Home Equity Loans and Lines of Credit. All loans in this segment are typically collateralized by a subordinate lien
position on owner-occupied residential real estate and repayment is dependent on the credit quality of the individual
borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on
the credit quality of this segment.
Consumer. Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the
individual borrower.
Derivative Financial Instruments
Derivative financial instruments are recognized as assets and liabilities on the consolidated statements of financial
condition and measured at fair value.
Loan Level Interest Rate Swaps — The Company enters into interest rate swaps with commercial loan customers to
synthetically convert the customer’s loan from a variable rate to a fixed rate. These swaps are matched in offsetting
terms to swaps that the Company enters into with an outside third party. The swaps are reported at fair value in other
assets and other liabilities. The Company’s swaps qualify as derivatives, but are not designated as hedging instruments,
thus any net gain or loss resulting from changes in the fair value is recognized in other non-interest income.
Loans Held for Sale
Loans held for sale are those mortgage loans the Company has the intent to sell in the foreseeable future and are
carried at the lower of aggregate cost or market value, with valuation changes recorded in non-interest income. Gains
and losses on sales of loans are recognized at the trade dates and are determined by the difference between the sales
proceeds and the carrying value of the loans.
Mortgage loans held for sale are generally sold with the mortgage servicing rights retained by the Company.
Transfers of Financial Assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control
over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company — put
presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the
transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange
the transferred assets and (3) the transferor does not maintain effective control over the transferred assets through either
(a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or
(b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.
During the normal course of business, the Company may transfer a portion of a financial asset, for example, a
participation loan or the government guaranteed portion of a loan. In order to be eligible for sales treatment, the transfer
of the portion of the loan must meet the criteria of a participating interest. If it does not meet the criteria of a
participating interest, the transfer must be accounted for as a secured borrowing. In order to meet the criteria for a
participating interest, all cash flows from the loan must be divided proportionately, the rights of each loan holder must
have the same priority, the loan holders must have no recourse to the transferor other than standard representations and
warranties and no loan holder has the right to pledge or exchange the entire loan.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-14
Servicing
Servicing assets are recognized as separate assets developed through the sale of residential mortgages. Servicing
rights are initially recorded at fair value with the income statement effect recorded in gain or loss on sales of loans. Fair
value is based on a valuation model that calculates the present value of estimated future net servicing income. The
valuation model incorporates assumptions that market participants would use in estimating future net servicing income,
such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment
speeds and default rates and losses. Capitalized servicing rights are reported in other assets and are amortized into non-
interest income in proportion to and over the period of the estimated future net servicing income of the underlying
financial assets.
Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost.
Impairment is determined by stratifying rights by predominant risk characteristics, such as interest rates and terms.
Impairment is recognized through a valuation allowance and charged to non-interest income, to the extent that fair value
is less than the capitalized amount. If the Company later determines that all or a portion of the impairment no longer
exists, a reduction of the allowance may be recorded as an increase to income.
Revenue Recognition
The Company recognizes revenue from contracts with customers when it satisfies its performance obligations
pursuant to the guidance in Accounting Standards Codification (“ASC”) Topic 606, Revenue Recognition (Topic 606).
The Company generally fully satisfies its performance obligations as services are rendered and the transaction prices are
typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as
services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that
significantly affects the determination of the amount and timing of revenue from contracts with customers. The main
types of revenue contracts included in non-interest income within the consolidated statements of operations are as
follows:
•
Fees for services to customers include service charges on deposits which are included in non-interest income in
the consolidated statements of income and consist of transaction-based fees: stop payment fees, Automated
Clearing House (ACH) fees, account maintenance fees, wire fees, official check fees and overdraft services fees
for various retail and business checking customers. These fees are earned on the day of the transaction or within
the month of the service. Service charges on deposits are withdrawn directly from the customer’s account
balance. ATM and debit card fees are recognized at the time the transaction is executed as that is the point in
time the Company fulfills the customer’s request. Sales of checks to depositors earn fees as a contractual
discount to the retail price of the sale from a third-party provider. These fees earned are remitted by the third-
party to the Company quarterly.
•
The Company earns interchange fee income from credit/debit cardholder transactions conducted through
MasterCard payment networks. Interchange fees from cardholder transactions represent a percentage of the
underlying transaction value and are recognized monthly, concurrently with the transaction processing services
provided to the cardholder within the month.
•
The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer,
which generally occurs at the time of an executed deed; at such time, the OREO asset is derecognized and the
gain or loss on the sale is recorded. Rental income received from leased OREO property is recognized during
the month it is earned.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-15
•
Retail brokerage fee income is accrued monthly to properly record the revenues in the month they are earned.
Advisory fees are collected in advance on a quarterly basis. These advisory fees are recorded in the first month
of the quarter for which the service is being performed. Investments into mutual funds and annuities generate
fees that are recorded as revenue at the time of the initial sale. In subsequent years the mutual funds and
variable annuities generate recurring fees (referred to as 12B-1 fees) that are paid in advance on the anniversary
of the original transaction. Fees that are transaction based are recognized at the point in time that the transaction
is executed (i.e., trade date). Life insurance products are sold on a commission basis that generates a fee that is
recorded as revenue within the month of the approved transaction.
Other income includes rental income, mortgage origination and service fees and late fees on serviced mortgages. All
items are recorded as revenue within the month that the service is provided.
Other Real Estate Owned
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less
cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically
performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell.
Revenue and expenses from operations and changes in the valuation allowance are included in operations. Costs relating
to the development and improvement of the property are capitalized, subject to the resulting limit of fair value of the
collateral. Gains or losses from disposal are recorded when control of the property transfers to the buyer.
Premises and Equipment
Premises and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is
charged to operations using the straight-line method over the estimated useful lives of the related assets. Leasehold
improvements are amortized over the shorter of the improvements’ estimated economic lives or the related lease terms.
Gains and losses on dispositions are recognized upon realization. Maintenance and repairs are expensed as incurred and
improvements are capitalized. Rent expense is charged to operations over the expected lease term using the straight-line
method.
Bank-Owned Life Insurance
The Company purchased bank owned life insurance (“BOLI”) on a chosen group of employees and directors. The
Company is the owner and sole beneficiary of the policies. Earnings from BOLI are recognized as part of non-interest
income. BOLI is carried at cash surrender value. Death benefit proceeds received in excess of the policies cash surrender
values are recognized in income upon receipt. The Company does not intend to surrender these policies and,
accordingly, no deferred taxes have been provided.
Goodwill and Amortizable Intangible Assets
The excess of the purchase price of an acquisition over the net fair value of the identifiable tangible and intangible
assets and liabilities is assigned to goodwill. Goodwill is not amortizable, but is subject to at least an annual assessment,
or more frequently in the presence of certain circumstances, for impairment.
Other intangible assets are stated at cost, less accumulated amortization and consist of purchased customer accounts
and core deposit intangibles. Purchased customer accounts primarily consist of records and files that contain information
about investment holdings. Core deposit intangibles represent the estimated fair value of acquired customer deposit
relationships. The value of these assets are amortized over their estimated lives of 13 years. In the presence of certain
circumstances, intangible assets may be assessed for impairment as well. Impairment exists when the carrying value
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-16
exceeds its fair value. In such circumstances a charge for the relevant impairment is recognized and the net book value is
reduced to the appropriate value.
Employee Benefit Plans
The Bank maintains the Rhinebeck Bank 401(k) Plan (the “401(k) Plan”) for substantially all of its employees, a
defined benefit pension plan (frozen as of June 30, 2012), as well as Supplemental Executive Retirement Plans (the
“SERPs”), all of which are tax qualified under the Internal Revenue Code.
Employee 401(k) plan expense is the amount of matching contributions. Pension expense is the net of service and
interest cost, return on plan assets and amortization of gains and losses not immediately recognized. SERP expense is the
net of interest cost and service cost, which allocates the benefits over years of service.
We account for benefits under the defined benefit plan in accordance with ASC Topic 715 “Pension and Other
Postretirement Benefits.” The guidance requires an employer to: (1) recognize in its statement of financial condition the
over funded or underfunded status of a defined benefit postretirement plan measured as the difference between the fair
value of plan assets and the benefit obligation; (2) measure a plan’s assets and its obligations that determine its funded
status as of the end of the employer’s fiscal year (with limited exceptions); and (3) recognize as a component of other
comprehensive income, net of tax, the actuarial gains and losses and the prior service costs and credits that arise during
the period.
The Bank created an employee stock ownership plan (the “ESOP”) for the benefit of employees who meet certain
eligibility requirements. Compensation expense for the ESOP is recorded at an amount equal to the shares allocated by
the ESOP multiplied by the average fair market value of the shares during the period. The Company recognizes
compensation expense ratably over the year based upon the Company’s estimate of the number of shares expected to be
allocated by the ESOP. Unearned compensation applicable to the ESOP is reflected as a reduction of stockholders’
equity in the consolidated statements of financial condition. The difference between the average fair market value and
the cost of the shares allocated by the ESOP is recorded as an adjustment to additional paid-in capital.
The Company maintains an equity incentive plan to grant stock options or restricted stock. The Company has
recorded stock-based employee compensation cost using the fair value method as allowed under generally accepted
accounting principles. Management estimated the fair values of all option grants using the Black-Scholes option-pricing
model. Management estimated the expected life of the options using the simplified method as allowed under generally
accepted accounting principles. The risk-free rate was determined utilizing the treasury yield for the expected life of the
option contract.
Income Taxes
The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that all or some portion of the deferred tax
assets will not be realized.
Income tax accounting guidance results in two components of income tax expense: current and deferred. Current
income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the relative
federal or state tax law to the taxable income determined. The Company determines deferred income taxes using the
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-17
liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of
the differences between the book and tax bases at the currently enacted income tax rates applicable to the period in
which the deferred tax assets and liabilities are expected to be realized or settled. Deferred income tax expense or benefit
results from changes in deferred tax assets (“DTAs”) and liabilities between periods. DTAs are reduced by a valuation
allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred
tax asset will not be realized. As of December 31, 2024 and 2023, the Company has no unrecognized tax benefits and
does not anticipate any significant changes to uncertain tax positions over the next 12 months.
When tax returns are filed, it is highly expected that most positions taken would be sustained upon examination by
the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of
the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial
statements in the period during which, based on all available evidence, management believes it is more likely than not
that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.
Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized
upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that
exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any
associated interest and penalties that would be payable to the taxing authorities upon examination. The Company had no
liabilities for uncertain tax positions at December 31, 2024 or 2023.
Interest and penalties associated with unrecognized tax benefits, if any, would be classified in other non-interest
expense in the consolidated statements of income.
Operating Segments
The Company operates as a single business segment, with financial performance reviewed on an aggregate basis by
the chief operating decision maker (CODM). The Company’s sole operating segment, Banking Operations, consists of
raising funds through deposits and borrowings, providing lending products, and making investments. Loan offerings
include real estate, commercial, and consumer loans to a diverse customer base.
Accounting standards require disclosure of reportable segments that meet certain financial thresholds, including
information about products and services, geographic areas, and major customers. However, as the Company operates
entirely within a single banking segment, the financial statements presented reflect the combined results of all operations
within that segment. The Company has no foreign operations or customers.
Earnings Per Share (“EPS”)
Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding
during the period. Diluted earnings per share is computed in a manner similar to that of basic earnings per share except
that the weighted-average number of common shares outstanding is increased to include the number of incremental
common shares that would have been outstanding under the treasury stock method if all potentially dilutive common
shares (such as stock options) issued became vested during the period. Unallocated common shares held by the ESOP
are not included in the weighted-average number of common shares outstanding for either the basic or diluted earnings
per share calculations.
Comprehensive Income
GAAP requires that recognized revenue, expenses, gains and losses be included in net income. Although certain
changes in assets and liabilities, such as unrealized gains and losses on available for sale securities and the net actuarial
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-18
gain (loss) of the defined benefit pension plan, are reported as a separate component of the stockholders’ equity section
of the consolidated statements of financial condition, such items, along with net income, are components of
comprehensive income.
Fair Value
The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair
value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Fair value is best determined based upon quoted
market prices. However, in certain instances, there are no quoted market prices for certain assets or liabilities. In cases
where quoted market prices are not available, fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of
the asset or liability.
Fair value measurements focus on exit prices in an orderly transaction (that is, not a forced liquidation or distressed
sale) between market participants at the measurement date under current market conditions. If there has been a
significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the
use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing
market participants would transact at the measurement date under current market conditions depends on the facts and
circumstances and requires the use of significant judgment.
The Company’s fair value measurements are classified into a fair value hierarchy based on the markets in which the
assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The three categories
within the hierarchy are as follows:
Level 1 Quoted prices in active markets for identical assets and liabilities.
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active
markets, quoted prices in markets that are not active; and model-based valuation techniques for which all
significant inputs are observable or can be corroborated by observable market data for substantially the
full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is
determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as
instruments for which the determination of fair value requires significant management judgment or
estimation.
Reclassifications
Amounts in the prior year consolidated financial statements are reclassified to conform to the current year’s
presentation when necessary without effect on net income.
Emerging Growth Company Status
As of December 31, 2024, the Company no longer qualifies as an emerging growth company under the provisions of
the Jumpstart Our Business Startups (JOBS) Act, following the expiration of the five-year period since its initial public
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-19
offering. As a result, the Company is now subject to additional regulatory requirements and reporting obligations under
the Securities Exchange Act of 1934 and other applicable securities laws.
Recent Accounting Pronouncements
Adoption of New Accounting Standards in 2024
Effective January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) 2023-07, "Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which requires public entities to disclose
information about their reportable segments’ significant expenses on an interim and annual basis. Under ASU 2023-07,
public entities must disclose significant expense categories and amounts for each reportable segment, where significant
expense categories are defined as those that are regularly reported to an entity’s chief operating decision-maker and
included in a segment’s reported measures of profit or loss. Additionally, public entities must disclose the amount of
other segment items and a description of its composition. As the Company has only one reportable segment, ASU
2023-07 did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Standards
In October 2023, the FASB issued ASU 2023-06, which amends the disclosure or presentation requirements related
to various subtopics in the FASB Accounting Standards Codification. In annual periods, this requires disclosure of an
entity’s accounting policy related to where in the statement of cash flows the entity presents cash flows associated with
derivative instruments and the related gains and losses. This also requires disclosure of the methods used in the diluted
earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during
interim periods. The effective dates of ASU 2023-06 will depend, in part, on whether an entity is already subject to the
SEC’s current disclosure requirements. For such entities and those that must “file or furnish financial statements with or
to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual
restrictions on transfer,” the effective date for each amendment will be the date on which the SEC’s removal of that
related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption
prohibited. For all other entities, the amendments will be effective two years after the date of such removal. The
Company is evaluating the impact of this ASU but does not expect it to have a material impact on the Company’s
consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax
Disclosures.” The amendments in ASU 2023-09 require greater disaggregation of income tax disclosures related to the
income tax rate reconciliation and income taxes paid. The ASU indicates that all entities will apply its guidance
prospectively with an option for retroactive application to each period in the financial statements. The guidance will be
effective for fiscal years beginning after December 15, 2024, and for interim periods for fiscal years beginning after
December 15, 2025, with an allowance for early adoption. The Company is evaluating the impact of this ASU but does
not expect it to have a material impact on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income –
Expense Disaggregation Disclosures”, which requires disaggregated disclosure of income statement expenses for public
business entities. The ASU does not change the expense captions an entity presents on the face of the income statement;
rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes
to the financial statements. The ASU requires new financial statement disclosures in tabular format, disaggregating
information about prescribed categories underlying any relevant income statement expense captions. The guidance will
be effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after
December 15, 2027, with early adoption permitted. Upon adoption, ASU 2024-03 may be applied prospectively or
retrospectively. The Company is evaluating the impact of this ASU but does not expect it to have a material impact on
the Company’s consolidated financial statements.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-20
2. Available for Sale Securities
The amortized cost, gross unrealized gains and losses and fair values of available for sale securities are as follows:
December 31, 2024
Gross
Gross
Unrealized
Unrealized
Amortized Cost
Gains
Losses
Fair Value
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
29,841
$
6
$
(154)
$
29,693
U.S. government agency mortgage-backed
securities–residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103,948
—
(10,456)
93,492
U.S. government agency securities . . . . . . . . . . . . . . . . . .
22,010
—
(844)
21,166
Municipal securities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,717
—
(224)
2,493
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,054
—
(1,471)
12,583
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
642
—
(122)
520
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
173,212
$
6
$
(13,271)
$ 159,947
December 31, 2023
Gross
Gross
Unrealized
Unrealized
Amortized Cost
Gains
Losses
Fair Value
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
25,072
$
—
$
(1,066)
$
24,006
U.S. government agency mortgage-backed
securities–residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
156,523
—
(27,943)
128,580
U.S. government agency securities . . . . . . . . . . . . . . . . . .
24,774
—
(1,616)
23,158
Municipal securities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,163
—
(260)
2,903
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,700
—
(2,060)
12,640
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
763
—
(65)
698
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
224,995
$
—
$
(33,010)
$ 191,985
(1) The issuers of municipal securities are all within New York State.
The following tables present the fair value and unrealized losses of the Company’s available for sale securities with
gross unrealized losses aggregated by the length of time the individual securities have been in a continuous unrealized
loss position:
December 31, 2024
Less Than 12 Months
12 Months or Longer
Total
Unrealized
Unrealized
Unrealized
Fair Value
Losses Fair Value
Losses
Fair Value
Losses
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . $ 9,957 $
(22) $ 4,866 $
(132) $ 14,823 $
(154)
U.S. government agency mortgage-backed
securities-residential . . . . . . . . . . . . . . . . . . . . . . 44,577 (1,074) 48,915 (9,382) 93,492 (10,456)
U.S. government agency securities . . . . . . . . . .
—
— 21,166
(844) 21,166
(844)
Municipal securities . . . . . . . . . . . . . . . . . . . . . .
—
— 2,493
(224)
2,493
(224)
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . .
—
— 12,583 (1,471) 12,583 (1,471)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
497
(122)
497
(122)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,534 $ (1,096) $ 90,520 $ (12,175) $ 145,054 $ (13,271)
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-21
December 31, 2023
Less Than 12 Months
12 Months or Longer
Total
Unrealized
Unrealized
Unrealized
Fair Value Losses Fair Value
Losses
Fair Value
Losses
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . $
— $
— $ 24,006 $ (1,066) $ 24,006 $ (1,066)
U.S. government agency mortgage-backed
securities-residential . . . . . . . . . . . . . . . . . . . . . .
—
— 128,580 (27,943) 128,580 (27,943)
U.S. government agency securities . . . . . . . . . .
—
— 23,158 (1,616) 23,158 (1,616)
Municipal securities . . . . . . . . . . . . . . . . . . . . . .
512
(18)
2,276
(242)
2,788
(260)
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . .
—
— 12,640 (2,060) 12,640 (2,060)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
672
(65)
—
—
672
(65)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,184 $
(83) $ 190,660 $ (32,927) $ 191,844 $ (33,010)
At December 31, 2024 and 2023, the Company had 172 and 233 individual available-for-sale securities with
unrealized losses totaling $13,271 and $33,010, respectively, with an aggregate depreciation of 7.66% and 14.68%,
respectively, from the Company’s amortized cost.
Unrealized losses on asset backed securities, state and municipal securities, and corporate bonds have not been
recognized into income because the issuers are of high credit quality, we do not intend to sell and it is likely that we will
not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes
in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the
securities. Any impairment that has not been recorded through an allowance for credit losses is recognized in other
comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale securities was
recorded for the year ended December 31, 2024.
Treasury securities, federal agency obligations, residential mortgage backed pass-through securities and commercial
mortgage backed pass-through securities are issued by U.S. Government agencies and U.S. Government sponsored
enterprises. Although a government guarantee exists on these investments, these entities are not legally backed by the
full faith and credit of the federal government. Nonetheless, at this time we do not foresee any set of circumstances in
which the government would not fund its commitments on these investments.
The Company elected not to measure an allowance for credit losses for accrued interest receivable, because a timely
write-off policy exists. A security is placed on non-accrual status at the time any principal or interest payments become
more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a
security placed on non-accrual status is reversed against interest income. There were no securities on non-accrual status,
and therefore there was no accrued interest related to securities reversed against interest income, for the years
ended December 31, 2024 or 2023. Total accrued interest receivable on available for sale securities totaled $498
and $602, at December 31, 2024 and 2023, respectively, and was reported in accrued interest receivable on
the consolidated statements of financial condition.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-22
The amortized cost and fair value of available for sale debt securities at December 31, 2024 and 2023, by
contractual maturities, are presented below. Actual maturities of mortgage-backed securities may differ from contractual
maturities because the mortgages underlying the securities may be called or repaid without any penalties. Because
mortgage-backed securities are not due at a single maturity date, they are not included in the maturity categories in the
following maturity summary:
December 31, 2024
December 31, 2023
Amortized Cost Fair Value Amortized Cost Fair Value
Maturity:
Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
34,394 $ 34,056 $
15,449 $ 15,170
After 1 but within 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,901
20,113
32,860
30,569
After 5 but within 10 years . . . . . . . . . . . . . . . . . . . . . . . . . .
13,327
11,766
19,400
16,968
After 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
Total Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,622
65,935
67,709
62,707
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . .
103,948
93,492
156,523 128,580
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
642
520
763
698
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
173,212 $ 159,947 $
224,995 $ 191,985
At December 31, 2024 and 2023, available for sale securities with a carrying value of $101,395 and $13,130,
respectively, were pledged to secure Federal Home Loan Bank of New York borrowings. In addition, $937 and $57,769
of available for sale securities, respectively, were pledged to secure borrowings at the Federal Reserve Bank of New
York (“FRBNY”).
Proceeds from the sale of available for sale securities aggregated $74,987 and $0 for the years ended December 31,
2024 and 2023, respectively. There were no gross gains during the periods ended December 31, 2024 and December 31,
2023. During the periods ended December 31, 2024 and 2023, there were gross losses of $16,041 and $0, respectively,
realized on the sales of securities.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-23
3. Loans and Allowance for credit losses
A summary of the Company’s loan portfolio is as follows:
At December 31,
2024
2023
Commercial real estate loans:
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
26,611
$
20,208
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
350,962
324,493
Multi-family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105,030
83,376
Residential real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,651
77,259
Commercial and industrial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91,517
88,927
Consumer loans:
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
295,669
394,245
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,656
11,990
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,830
8,095
Total gross loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
974,926
1,008,593
Dealer reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,392
8,382
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,539)
(8,124)
Total net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
971,779
$
1,008,851
At December 31, 2024 and 2023, the unpaid principal balances of loans held for sale, included in the residential real
estate category above, were $0 and $908, respectively.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-24
On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real
estate, multifamily, construction and commercial loans. To assist in the review process, the Company engages an
independent third-party to review a significant portion of loans within these segments. Consumer and residential loans
are rated as performing or non-performing based on payment status in accordance with regulatory retail credit guidance.
Management uses the results of these reviews as part of its annual review process. In addition, management utilizes
delinquency reports, the watch list and other loan reports to monitor credit quality of other loan segments.
Credit Quality Indicators. The Company categorizes loans into risk categories based on relevant information about
the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit
documentation, public information, and current economic trends among other factors. The Company analyzes loans
individually by classifying the loans as to credit risk. This analysis is performed on all loans at origination and is updated
on a quarterly basis for loans risk rated Watch, Special Mention, Substandard, or Doubtful.
The Company uses the following definitions for risk ratings:
Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include
deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or
management problems.
Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make
payments within 30 days. This is a transitional rating and loans should typically not be rated Special Mention for more
than 12 months.
Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the
principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor
financial condition, and/or insufficient collateral. They are characterized by the distinct possibility that the institution
will sustain some loss if the deficiencies are not corrected.
Doubtful – Loans classified as non-performing have all the weaknesses of substandard loans, and have deteriorated
to the level that there is a high probability of substantial loss.
Loans not meeting the criteria above that are analyzed individually as part of the above described process are
considered Pass rated loans.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-25
The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process and
deferred loan fees) based on rating category, as well as gross write-offs for the year ended December 31, 2024, and
by fiscal year of origination as of December 31, 2024.
Revolving
Loans by Origination Year
Loans
2024
2023
2022
2021
2020
Prior
Amortized Cost
Total
Commercial construction
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,509
$ 17,261
$
2,841
$
-
$
-
$
-
$
-
$ 26,611
Total commercial construction . . . . . . . . . . .
6,509
17,261
2,841
-
-
-
-
26,611
Commercial non-residential
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 46,429
$ 36,900
$ 47,082
$ 27,329
$ 16,104
$
69,260
$
-
$ 243,104
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,515
14,336
16,201
7,341
10,952
33,799
-
91,144
Special mention . . . . . . . . . . . . . . . . . . . . .
-
-
3,009
873
322
5,745
-
9,949
Substandard . . . . . . . . . . . . . . . . . . . . . . . .
-
-
2,834
-
-
3,931
-
6,765
Total commercial non-residential . . . . . . . . . .
54,944
51,236
69,126
35,543
27,378
112,735
-
350,962
Current-period gross write-offs . . . . . . . . . . .
-
-
-
-
-
291
-
291
Multifamily
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
-
$
1,398
$ 18,410
$ 28,939
$
2,034
$
5,296
$
-
$ 56,077
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,673
10,235
11,027
11,863
-
10,155
-
48,953
Total multifamily . . . . . . . . . . . . . . . . . . . .
5,673
11,633
29,437
40,802
2,034
15,451
-
105,030
Residential
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$ 15,456
$ 26,755
$ 23,922
$
2,032
$
2,638
$
14,666
$
-
$ 85,469
Non-performing . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
-
1,182
-
1,182
Total residential . . . . . . . . . . . . . . . . . . . . .
15,456
26,755
23,922
2,032
2,638
15,848
-
86,651
Commercial and industrial
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 13,386
$
9,810
$ 19,044
$
7,944
$
650
$
957
$
17,303
$ 69,094
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,269
745
5,667
191
365
1,081
10,004
21,322
Special mention . . . . . . . . . . . . . . . . . . . . .
-
-
506
191
98
6
-
801
Substandard . . . . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
-
103
38
141
Doubtful . . . . . . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
-
159
-
159
Total commercial and industrial . . . . . . . . . .
16,655
10,555
25,217
8,326
1,113
2,306
27,345
91,517
Current-period gross write-offs . . . . . . . . . . .
-
40
-
7
-
561
-
608
Indirect automobile
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$ 54,048
$ 72,083
$ 104,879
$ 42,286
$ 15,440
$
6,343
$
-
$ 295,079
Non-performing . . . . . . . . . . . . . . . . . . . . .
46
78
182
187
62
35
-
590
Total indirect automobile . . . . . . . . . . . . . . .
54,094
72,161
105,061
42,473
15,502
6,378
-
295,669
Current-period gross write-offs . . . . . . . . . . .
171
812
1,533
665
256
189
-
3,626
Home equity
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$
341
$
-
$
-
$
-
$
-
$
3,684
$
7,457
$ 11,482
Non-performing . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
-
174
-
174
Total home equity . . . . . . . . . . . . . . . . . . . .
341
-
-
-
-
3,858
7,457
11,656
Other consumer
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,581
$
1,703
$
1,829
$
400
$
89
$
11
$
217
$
6,830
Total other consumer . . . . . . . . . . . . . . . . . .
2,581
1,703
1,829
400
89
11
217
6,830
Current-period gross write-offs . . . . . . . . . . .
12
82
73
6
24
4
-
201
Total Loans
Pass/performing . . . . . . . . . . . . . . . . . . . . .
$ 132,241
$ 148,649
$ 215,166
$ 108,930
$
36,955
$ 100,217
$
24,977
$ 767,135
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,966
42,577
35,736
19,395
11,317
45,035
10,004
188,030
Special mention . . . . . . . . . . . . . . . . . . . . .
0
-
3,515
1,064
420
5,751
-
10,750
Substandard . . . . . . . . . . . . . . . . . . . . . . . .
-
-
2,834
-
0
4,034
38
6,906
Non-performing . . . . . . . . . . . . . . . . . . . . .
46
78
182
187
62
1,391
-
1,946
Total Loans . . . . . . . . . . . . . . . . . . . . . . . .
$ 156,253
$ 191,304
$ 257,433
$ 129,576
$
48,754
$ 156,587
$
35,019
$ 974,926
Total Current-period gross write-offs . . . . . . .
$
183
$
934
$
1,606
$
678
$
280
$
1,045
$
-
$
4,726
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-26
The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process and
deferred loan fees) based on rating category, as well as gross write-offs for the year ended December 31, 2023, and
by fiscal year of origination as of December 31, 2023.
Revolving
Loans by Origination Year
Loans
2023
2022
2021
2020
2019
Prior
Amortized Cost
Total
Commercial construction
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
-
$
8,227
$
-
$
-
$
-
$
-
$
-
$
8,227
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,328
2,653
-
-
-
-
-
11,981
Total commercial construction . . . . . . . . . . .
9,328
10,880
-
-
-
-
-
20,208
Commercial non-residential
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 34,508
$ 43,534
$ 26,600
$ 16,673
$ 39,943
$
44,412
$
-
$ 205,670
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,575
19,235
14,854
12,747
7,573
38,004
-
108,988
Special mention . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
5,884
963
-
6,847
Substandard . . . . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
465
2,523
-
2,988
Total commercial non-residential . . . . . . . . . .
51,083
62,769
41,454
29,420
53,865
85,902
-
324,493
Multifamily
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
807
$ 18,765
$ 30,374
$
2,100
$
1,540
$
4,348
$
-
$
57,934
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,000
6,754
6,925
-
1,265
9,498
-
25,442
Total multifamily . . . . . . . . . . . . . . . . . . . .
1,807
25,519
37,299
2,100
2,805
13,846
-
83,376
Residential
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$ 28,670
$ 25,260
$
2,150
$
2,732
$
2,626
$
14,197
$
-
$
75,635
Non-performing . . . . . . . . . . . . . . . . . . . . .
-
257
-
-
-
1,367
-
1,624
Total residential . . . . . . . . . . . . . . . . . . . . .
28,670
25,517
2,150
2,732
2,626
15,564
-
77,259
Current-period gross write-offs . . . . . . . . . . .
-
-
-
-
-
-
-
-
Commercial and industrial
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 12,637
$ 26,070
$ 10,804
$
1,474
$
962
$
1,254
$
11,662
$
64,863
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,082
3,227
321
620
482
1,603
14,204
22,539
Special mention . . . . . . . . . . . . . . . . . . . . .
224
-
301
-
33
-
-
558
Substandard . . . . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
83
841
43
967
Total commercial and industrial . . . . . . . . . .
14,943
29,297
11,426
2,094
1,560
3,698
25,909
88,927
Current-period gross write-offs . . . . . . . . . . .
-
-
710
-
-
126
-
836
Indirect automobile
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$ 101,230
$ 160,439
$ 72,941
$ 34,196
$ 19,035
$
5,773
$
-
$ 393,614
Non-performing . . . . . . . . . . . . . . . . . . . . .
31
259
196
69
63
13
-
631
Total indirect automobile . . . . . . . . . . . . . . .
101,261
160,698
73,137
34,265
19,098
5,786
-
394,245
Current-period gross write-offs . . . . . . . . . . .
198
1,492
1,034
418
309
126
-
3,577
Home equity
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$
-
$
-
$
-
$
-
$
34
$
4,064
$
7,793
$
11,891
Non-performing . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
-
99
-
99
Total home equity . . . . . . . . . . . . . . . . . . . .
-
-
-
-
34
4,163
7,793
11,990
Other consumer
Performing . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,928
$
3,477
$
856
$
411
$
138
$
22
$
238
$
8,070
Non-performing . . . . . . . . . . . . . . . . . . . . .
-
-
-
24
-
-
1
25
Total other consumer . . . . . . . . . . . . . . . . . .
2,928
3,477
856
435
138
22
239
8,095
Current-period gross write-offs . . . . . . . . . . .
8
30
10
11
-
3
-
62
Total Loans
Pass/performing . . . . . . . . . . . . . . . . . . . . .
$ 180,780
$ 285,772
$ 143,725
$
57,586
$
64,278
$
74,070
$
19,693
$ 825,904
Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,985
31,869
22,100
13,367
9,320
49,105
14,204
168,950
Special mention . . . . . . . . . . . . . . . . . . . . .
224
-
301
0
5,917
963
-
7,405
Substandard . . . . . . . . . . . . . . . . . . . . . . . .
-
-
-
-
548
3,364
43
3,955
Non-performing . . . . . . . . . . . . . . . . . . . . .
31
516
196
93
63
1,479
1
2,379
Total Loans . . . . . . . . . . . . . . . . . . . . . . . .
$ 210,020
$ 318,157
$ 166,322
$
71,046
$
80,126
$ 128,981
$
33,941
$ 1,008,593
Total Current-period gross write-offs . . . . . . .
$
206
$
1,522
$
1,754
$
429
$
309
$
255
$
-
$
4,475
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-27
Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the
portfolio as determined by the length of time a recorded payment is past due. The past due status of all classes of loans is
determined based on contractual due dates for loan payments.
The following tables present the classes of the loan portfolio summarized by the aging categories of performing
loans and non-accrual loans:
December 31, 2024
Greater Than
30-59 Days
60-89 Days
90 Days Past
Total Loans
Current
Past Due
Past Due
Due
Receivable Non-accrual
Commercial real estate:
Construction . . . . . . . . . . . . . . . . . .
$ 26,611
$
—
$
—
$
—
$ 26,611
$
—
Non-residential . . . . . . . . . . . . . . . .
348,220
873
—
1,869
350,962
1,869
Multifamily . . . . . . . . . . . . . . . . . . .
105,008
22
—
—
105,030
—
Residential real estate . . . . . . . . . . . .
85,961
604
—
86
86,651
1,182
Commercial and industrial . . . . . . . .
91,090
57
159
211
91,517
319
Consumer:
Indirect automobile . . . . . . . . . . . . . 283,458 10,062
1,593
556 295,669
590
Home equity . . . . . . . . . . . . . . . . . .
11,173
153
156
174
11,656
174
Other consumer . . . . . . . . . . . . . . . .
6,689
121
20
—
6,830
—
Total . . . . . . . . . . . . . . . . . . . . . . .
$ 958,210
$ 11,892
$
1,928
$
2,896
$ 974,926
$
4,134
December 31, 2023
Greater Than
30-59 Days
60-89 Days
90 Days Past
Total Loans
Current
Past Due
Past Due
Due
Receivable Non-accrual
Commercial real estate:
Construction . . . . . . . . . . . . . . . . . . $ 20,208
$
—
$
—
$
—
$
20,208
$
—
Non-residential . . . . . . . . . . . . . . . .
319,467
1,276
2,129
1,621
324,493
1,621
Multifamily . . . . . . . . . . . . . . . . . . .
83,376
—
—
—
83,376
—
Residential real estate . . . . . . . . . . . .
75,998
888
37
336
77,259
1,624
Commercial and industrial . . . . . . . .
88,646
17
83
181
88,927
181
Consumer:
Indirect automobile . . . . . . . . . . . . . 382,042 10,155
1,478
570
394,245
631
Home equity . . . . . . . . . . . . . . . . . .
11,843
—
48
99
11,990
99
Other consumer . . . . . . . . . . . . . . . .
7,844
202
24
25
8,095
25
Total . . . . . . . . . . . . . . . . . . . . . . . $ 989,424
$ 12,538
$ 3,799
$
2,832
$ 1,008,593
$ 4,181
All of our non-accrual loans are individually analyzed. The Company had one individually analyzed home equity
loan of $98 that was accruing interest at December 31, 2024.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-28
The following table presents the Company’s amortized cost basis of non-accrual loans for which there is no related
ACL:
December 31, 2024
December 31, 2023
Commercial real estate:
Non-residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,869
$
1,152
Residential real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,182
1,624
Commercial and industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
299
150
Consumer:
Indirect automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
160
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
174
99
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
24
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,655
$
3,209
The following table presents the Company’s amortized cost basis of only those non-accrual loans with a related
ACL:
December 31, 2024
December 31, 2023
Non-accrual loans
Related ACL
Non-accrual loans
Related ACL
Commercial real estate:
Non-residential . . . . . . . . . . . . . . . . .
$
— $
—
$
469 $
16
Commercial and industrial . . . . . . . . .
20
20
31
31
Consumer:
Indirect automobile . . . . . . . . . . . . .
459
139
471
166
Other consumer . . . . . . . . . . . . . . . .
—
—
1
1
Total . . . . . . . . . . . . . . . . . . . . . . . . .
$
479 $
159
$
972 $
214
For the year ended December 31, 2024, $147 in accrued interest was reversed for non-accrual loans. Total accrued
interest receivable associated with loans totaled $3,937 and $4,014, at December 31, 2024 and December 31, 2023,
respectively, and was reported in accrued interest receivable on the consolidated statements of financial condition.
The Company has transferred a portion of its originated commercial real estate loans to participating lenders. The
amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying
statements of financial condition. The Company and participating lenders share ratably in any gains or losses that may
result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the
loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments to
participating lenders and disburses required escrow funds to relevant parties. At December 31, 2024 and 2023, the
Company was servicing loans for participants aggregating $54,390 and $44,418, respectively.
The Company services certain loans that it has sold to third parties. The aggregate balances of loans serviced for
others were $266,547 and $282,269 as of December 31, 2024 and 2023, respectively. Included in these loans serviced
for others are loans serviced for the Federal Home Loan Mortgage Corporation with a recourse provision whereby the
Company is obligated to bear all costs when a default, including foreclosure, occurs. At December 31, 2024 and 2023,
the maximum contingent liability associated with loans sold with recourse was $805 and $1,873, respectively, which is
not recorded in the consolidated financial statements. Losses are borne in priority order by the borrower, private
mortgage insurance and the Company. The Company has never repurchased any loans or incurred any losses under these
recourse provisions.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-29
The balance of capitalized servicing rights, included in other assets at December 31, 2024 and 2023, were $1,592
and $1,977, respectively. Fair value exceeds carrying value. No impairment charges related to servicing rights were
recognized during the years ended December 31, 2024 or 2023.
Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure
proceedings are in process totaled $531 and $152 at December 31, 2024 and 2023, respectively.
In the normal course of business, the Company grants loans to officers, directors and other related parties. Balances
and activity of such loans during the years presented were not material.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-30
Activity in the Company’s ACL for loans for the year ended December 31, 2024 is summarized in the table below.
Commercial
Residential
Commercial
Real Estate Real Estate and Industrial
Indirect Consumer
Totals
Year ended December 31, 2024
Allowance for credit losses:
Beginning balance . . . . . . . . . . . . . . . . . $
2,716 $
346 $
606 $
4,348 $
108 $
8,124
Provision for credit losses . . . . . . . . .
563
229
684
1,178
159
2,813
Loans charged-off . . . . . . . . . . . . . . . .
(291)
—
(608)
(3,626)
(201)
(4,726)
Recoveries . . . . . . . . . . . . . . . . . . . . . .
—
—
2
2,233
93
2,328
Ending balance . . . . . . . . . . . . . . . . . . . $
2,988 $
575 $
684 $
4,133 $
159 $
8,539
Ending balance:
Loans individually analyzed . . . . . . . $
— $
— $
20 $
139 $
— $
159
Loans collectively analyzed . . . . . . . . $
2,988 $
575 $
664 $
3,994 $
159 $
8,380
Loan receivables:
Ending balance . . . . . . . . . . . . . . . . . . . $ 482,603 $ 86,651 $
91,517 $ 295,669 $ 18,486 $ 974,926
Ending balance:
Loans individually analyzed . . . . . . . $
1,868 $
1,183 $
319 $
590 $
272 $
4,232
Loans collectively analyzed . . . . . . . . $ 480,735 $ 85,468 $
91,198 $ 295,079 $ 18,214 $ 970,694
Activity in the Company’s allowance for loan losses for the year ended December 31, 2023 is summarized in the
table below.
Commercial
Residential
Commercial
Real Estate Real Estate and Industrial Indirect Consumer
Totals
Year ended December 31, 2023
Allowance for credit losses:
Beginning balance . . . . . . . . . . . . . . . . . . . . $
3,031 $
103 $
881 $ 3,868 $
60 $
7,943
Adoption of ASC 326 . . . . . . . . . . . . . . . .
(860)
54
(383)
1,710
59
580
Provision for (reversal of)
credit losses . . . . . . . . . . . . . . . . . . . . . . .
545
137
833
165
(14)
1,666
Loans charged-off . . . . . . . . . . . . . . . . . . .
—
—
(836)
(3,577)
(62)
(4,475)
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . .
—
52
111
2,182
65
2,410
Ending balance . . . . . . . . . . . . . . . . . . . . . . $
2,716 $
346 $
606 $ 4,348 $
108 $
8,124
Ending balance:
Loans individually analyzed . . . . . . . . . . $
16 $
— $
32 $
166 $
2 $
216
Loans collectively analyzed . . . . . . . . . . . $
2,700 $
346 $
574 $ 4,182 $
106 $
7,908
Loan receivables:
Ending balance . . . . . . . . . . . . . . . . . . . . . . $ 428,077 $ 77,259 $
88,927 $ 394,245 $ 20,085 $ 1,008,593
Ending balance:
Loans individually analyzed . . . . . . . . . . $
1,621 $ 1,624 $
181 $
631 $
222 $
4,279
Loans collectively analyzed . . . . . . . . . . . $ 426,456 $ 75,635 $
88,746 $ 393,614 $ 19,863 $ 1,004,314
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-31
The Company’s allowance for credit losses for loans totaled $8,539 and $8,124 as of December 31, 2024 and
December 31, 2023, respectively. The $415 increase in our allowance for credit losses for loans was primarily
driven by an increase in our collectively evaluated loans, partially offset by a decrease in the allowance for credit
losses on individually analyzed loans.
Activity in the Company’s ACL for unfunded commitments for the years ended December 31, 2024 and 2023 is
summarized in the tables below and included in accrued expenses and other liabilities. The Adoption of the CECL
Standard row presents adjustments recorded on January 1, 2023 through retained earnings.
Commercial
Commercial
Real Estate Residential and Industrial Indirect Consumer
Totals
Year ended December 31, 2024
Allowance for credit losses:
Beginning balance . . . . . . . . . . . . . . . . . . . $
172 $
— $
72 $
— $
13 $
257
(Reversal of) provision for
credit losses . . . . . . . . . . . . . . . . . . . . . .
(53)
1
32
—
7
(13)
Ending balance . . . . . . . . . . . . . . . . . . . . . $
119 $
1 $
104 $
— $
20 $
244
Commercial
Commercial
Real Estate Residential and Industrial Indirect Consumer
Totals
Year ended December 31, 2023
Allowance for credit losses:
Beginning balance . . . . . . . . . . . . . . . . . . . $
— $
— $
— $
— $
— $
—
Adoption of CECL standard. . . . . . . . . .
149
—
65
—
7
221
Provision for credit losses . . . . . . . . . . .
23
—
7
—
6
36
Ending balance . . . . . . . . . . . . . . . . . . . . . $
172 $
— $
72 $
— $
13 $
257
The following table summarizes the provision for credit losses for the years ended December 31, 2024 and
2023:
Year Ended December 31,
2024
2023
Provision for credit losses - loans . . . . . . . . . . . . . . . . . . . .
$
2,813 $
1,666
(Reversal of) provision for credit losses -
unfunded commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13)
36
Provision for credit losses. . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,800 $
1,702
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-32
4. Goodwill and Intangible Assets
The changes in the carrying value of goodwill are as follows:
Year Ended
December 31,
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,235
$
2,235
Activity during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,235
$
2,235
The Company performs its annual goodwill impairment test during the fourth quarter. The results of the Company’s
impairment tests indicated that the reporting unit’s fair value was greater than its carrying value and therefore no
impairment of goodwill existed at either December 31, 2024 or 2023. Even though the Company determined that there
was no goodwill impairment, a sustained decline in the value of its stock price as well as values of other financial
institutions, declines in revenue for the Company beyond our current forecasts or significant adverse changes in the
operating environment for the reporting unit may result in a future impairment charge.
The changes in the carrying value of the customer list and core deposit intangibles are as follows:
Years Ended
December 31,
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
246 $
334
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(80)
(88)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
166 $
246
Core deposit intangibles represent the estimated fair value of acquired customer deposit relationships on the date of
acquisition and are amortized over their estimated useful lives. Purchased customer accounts primarily consist of records
and files that contain information about investment holdings. The values assigned to customer lists and core deposit
intangibles is based upon the application of the income approach. At December 31, 2024, based upon a review of the
intangibles, the Company determined that the fair value of the amortizable intangible assets exceeded their carrying
values.
As of December 31, 2024, the future amortization expense for amortizable intangible assets for the respective years
is as follows:
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
60
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
166
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-33
5. Premises and Equipment
Premises and equipment are summarized as follows:
December 31,
December 31,
2024
2023
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,025 $
3,356
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . .
26,377
27,774
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . .
14,929
14,889
Construction in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141
461
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,472
46,480
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . .
(29,367)
(28,913)
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
14,105 $
17,567
Depreciation expense totaled $1,343 and $1,404 for the years ended December 31, 2024 and 2023, respectively.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-34
6. Deposits
Deposits balances are summarized as follows:
December 31,
December 31,
2024
2023
Non-interest bearing demand deposits . . . . . . . . . . . . . . . . . . . . . $
238,126 $
249,793
Interest bearing accounts:
NOW(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123,466
125,628
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132,648
146,172
Money market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
188,904
190,864
Time certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . .
337,639
318,046
Total interest bearing accounts . . . . . . . . . . . . . . . . . . . . . . . .
782,657
780,710
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,020,783 $ 1,030,503
(1)
Negotiable order of withdrawal
The Company has established a relationship to participate in a reciprocal deposit program with other financial
institutions. The reciprocal deposit program provides access to FDIC-insured deposit products in aggregate amounts
exceeding the current limits for depositors. At December 31, 2024 and 2023, total reciprocal deposits were $38,909 and
$40,009, respectively. Included in time certificates of deposit at December 31, 2024 and 2023 were reciprocal deposits
totaling $25,427 and $23,357, respectively, with original maturities of one to three years. Reciprocal deposits included in
money market accounts totaled $13,482 and $16,652 at December 31, 2024 and 2023, respectively.
The Company did not have any brokered deposits at December 31, 2024 or 2023. Time certificates of deposit in
denominations of $250 or greater were $95,591 and $100,063 as of December 31, 2024 and 2023, respectively.
Contractual maturities of time certificates of deposit at December 31, 2024 are summarized below:
December 31,
2024
Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 288,303
1 – 2 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,050
2 – 3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
413
3 – 4 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,209
4 – 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,664
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 337,639
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-35
7. Debt and FHLB Stock
FHLB Borrowings and Stock
The Company is a member of the FHLB. At December 31, 2024 and 2023, the Company had access to a
preapproved secured line of credit with the FHLB of $627,265 and $656,516, respectively. Borrowings under this line
require collateralization through the pledge of specific loans and securities. At December 31, 2024 and 2023, the
Company had pledged assets of $306,410 and $228,172, respectively. The Company had no outstanding overnight line
of credit balances with the FHLB at either December 31, 2024 or 2023. These borrowings would mature the following
business day. At December 31, 2024, the Company had borrowings in the amount of $69,773. The outstanding principal
amounts and the related terms and rates at December 31, 2024 were as follows:
Term
Principal
Maturity
Rate
Due in one year
Long term
Fixed short-term . . . . . . . . . . . .
$ 20,000
January 31, 2025
4.50 %
$
20,000
$
—
Fixed medium-term . . . . . . . . . .
20,000
March 20, 2025
4.47 %.
20,000
—
Fixed medium-term . . . . . . . . . .
722
October 31, 2025
4.87 %
722
—
Fixed medium-term . . . . . . . . . .
5,000
November 3, 2025
4.87 %
5,000
—
Fixed medium-term . . . . . . . . . .
728
December 5, 2025
4.34 %
728
—
Fixed medium-term . . . . . . . . . .
1,233
September 21, 2026
5.20 %
—
1,233
Fixed medium-term . . . . . . . . . .
381
November 9, 2026
5.04 %
—
381
Fixed medium-term . . . . . . . . . .
969
May 3, 2027
4.99 %
—
969
Fixed medium-term . . . . . . . . . .
740
June 21, 2027
4.73 %
—
740
Fixed medium-term . . . . . . . . . .
20,000
May 2, 2028
3.88 %
—
20,000
Total . . . . . . . . . . . . . . . . . . . . . .
$ 69,773
Weighted Average Rate
4.37 %
$
46,450
$ 23,323
The Company is required to maintain an investment in capital stock of the FHLB, as collateral, in an amount equal
to a certain percentage of its outstanding debt. FHLB stock is considered restricted stock and is carried at cost. The
Company evaluates for impairment based on the ultimate recovery ability of the cost. No impairment was recognized at
either December 31, 2024 or 2023.
Subordinated Debt
In addition to the Bank, the Company has one other wholly-owned subsidiary, RSB Capital Trust I (the “Trust”). In
2005, the Trust issued $5,000 of pooled trust preferred securities in a private placement and issued 155 shares of
common stock at $1 par value per share, now owned by the Company. The Trust, which has no independent assets or
operations, was formed in 2005 for the sole purpose of issuing trust preferred securities and investing the proceeds
thereof in an equivalent amount of junior subordinated debentures. The proceeds from the issuance of the trust preferred
securities were down-streamed to the Bank and are currently considered Tier 1 capital for purposes of determining the
Bank’s capital ratios. The duration of the Trust is 30 years.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-36
The subordinated debt securities of $5,155 are unsecured obligations of the Company and are subordinate and junior
in right of payment to all present and future senior indebtedness of the Company. The Company has entered into a
guarantee, which together with its obligations under the subordinated debt securities and the declaration of trust
governing the Trust, including its obligations to pay costs, expenses, debts and liabilities, other than trust securities,
provides a full and unconditional guarantee of amounts on the capital securities. The subordinated debentures, which
bear interest at three month CME term Secured Overnight Financing Rate (“SOFR”) plus 2% and a relative spread
adjustment of 0.26% was 7.78% and 7.64% at December 31, 2024 and 2023, respectively. The subordinated debentures
mature on May 23, 2035.
Other Borrowings
The Bank has an unsecured, uncommitted $10,000 line of credit with Zions Bank. There were no advances
outstanding under this line of credit at December 31, 2024 or 2023.
The Bank also has an unsecured, uncommitted $50,000 line of credit with Pacific Community Bankers Bank. There
were no advances outstanding under this line of credit at December 31, 2024 or 2023.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-37
8. Income Taxes
The components of the provision for income taxes are as follows:
Years Ended December 31,
2024
2023
Current expense:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(1) $ 1,314
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
265
257
Total current expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
264
1,571
Deferred expense:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,581)
(352)
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(738)
(148)
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
738
148
Total deferred expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,581)
(352)
Total provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,317) $ 1,219
The following is a reconciliation between the expected federal statutory income tax rate of 21% and the Company’s
actual income tax expense and rate:
Years ended December 31,
2024
2023
(Benefit) provision at statutory rate . . . . . . . . . . . . . . . . . . . . . .
$ (2,297)
21.00 % $
1,179
21.00 %
Tax exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(248)
2.27 %
(192)
(3.42)%
State income taxes, net of federal income tax benefit . . . . . . . .
215
(1.97)%
213
3.79 %
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
(0.12)%
19
0.34 %
Effective income tax and rate . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (2,317)
21.18 % $
1,219
21.71 %
Provision for income taxes directly reflects the expected tax associated with the pre-tax income generated for the
given year and certain regulatory requirements. The statutory tax rate is impacted by the benefits derived mainly from
tax-exempt bond income and income received on the bank owned life insurance to arrive at the effective tax rate.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-38
The tax effects of temporary differences that give rise to significant components of the deferred tax assets and
deferred tax liabilities at December 31, 2024 and 2023 are presented below:
December 31,
2024
2023
Deferred tax assets:
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,371
$
2,263
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
18
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,773
1,652
Unrecognized pension liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
653
910
Postretirement liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,032
1,002
Unrealized loss on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,786
6,932
Federal tax NOLs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,538
—
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
889
658
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,063
13,435
Deferred tax liabilities:
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(578)
(515)
Prepaid pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,180)
(1,222)
Deferred loan fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(51)
(154)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(374)
(476)
Mortgage servicing rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(430)
(534)
Gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,613)
(2,901)
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,450
10,534
Deferred tax valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,336)
(598)
Deferred tax assets, net of allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
8,114
$
9,936
As of December 31, 2024, the Company has a federal net operating loss (“NOL”) carryforward of $9,400, which
carries forward indefinitely under current tax regulations. This NOL resulted in a deferred tax asset of $2,538,
representing a temporary difference in the Company’s financial statements. The realization of this deferred tax asset
depends on the Company’s ability to generate sufficient future taxable income. Based on management’s assessment of
projected earnings and other relevant factors, the Company has recorded a deferred tax valuation allowance of $1,336 as
of December 31, 2024, compared to $598 as of December 31, 2023. The increase in the valuation allowance reflects
management’s evaluation of the likelihood of utilizing certain deferred tax assets in future periods.
New York State (“NYS”) tax law provides for a permanent deduction of income from “qualified” loans for
community banks. Accordingly, the Company has generally incurred NYS taxable losses and incurred minimal NYS
income tax liability. As the Company has not established a history of strong NYS taxable income, the Company has
established a full valuation allowance against the NYS deferred tax asset.
Retained earnings at December 31, 2024 and 2023 include a contingency reserve for loan losses of $1,534, which
represents the tax reserve balance existing at December 31, 1987 and is maintained in accordance with provisions of the
Internal Revenue Code applicable to mutual savings banks. Amounts transferred to the reserve have been claimed as
deductions from taxable income and, if the reserve is used for purposes other than to absorb losses on loans, a federal
income tax liability could be incurred. It is not anticipated that the Company will incur a federal income tax liability
relating to this reserve balance and accordingly, deferred income taxes of $414 at December 31, 2024 and $414 at
December 31, 2023 have not been recognized.
The Company’s income tax returns are subject to review and examination by federal and state taxing authorities.
The Company is currently open to audit under the applicable statutes of limitations by the Internal Revenue Service for
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-39
the years ended December 31, 2021 through 2024. The years open to examination by state taxing authorities vary by
jurisdiction; no years prior to 2021 are open.
As of December 31, 2024, the Company has no unrecognized tax benefits.
9. Employee Benefits
Employee Stock Ownership Plan
On January 1, 2019, the Bank established an ESOP to provide eligible employees the opportunity to own Company
stock. The plan is a tax-qualified retirement plan for the benefit of Bank employees. On January 16, 2019, the Company
granted a loan to the ESOP to purchase 436,425 shares of the Company’s common stock at a price of $10.00 per share.
The loan is payable annually over 20 years at a rate per annum equal to the Prime Rate, reset annually on January 1st
(8.50% at January 1, 2024 and 7.50% at January 1, 2025). Loan payments are principally funded by cash contributions
from the Bank. The loan is secured by the shares purchased, which are held in a suspense account for allocation among
participants as the loan is repaid. The balance of the ESOP loan was $3,484 and $3,612 at December 31, 2024 and 2023,
respectively. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax
limits. The number of shares committed to be released annually is 21,821 through 2039.
Shares held by the ESOP include the following:
December 31,
December 31,
2024
2023
Allocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109,105
87,286
Committed to be allocated . . . . . . . . . . . . . . . . . . . . . . .
21,821
21,821
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
305,499
327,318
Paid out to participants . . . . . . . . . . . . . . . . . . . . . . . . . .
(23,638)
(10,988)
Total shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
412,787
425,437
The fair value of unallocated shares was $2,954 and $2,635 at December 31, 2024 and 2023, respectively.
Total compensation expense recognized in connection with the ESOP for the years ended December 31, 2024 and
2023 was $186 and $162, respectively.
Share-Based Compensation Plan
On May 26, 2020, stockholders of the Company approved the 2020 Equity Incentive Plan (the “EIP”). The EIP
authorizes the issuance to participants of up to 763,743 shares of Rhinebeck Bancorp common stock pursuant to grants
of incentive and non-qualified stock options, restricted stock awards and restricted stock units. Of this number, the
maximum number of shares of Rhinebeck Bancorp common stock that may be issued under the EIP pursuant to the
exercise of stock options is 545,531 shares, and the maximum number of shares of Rhinebeck Bancorp common stock
that may be issued as restricted stock awards or restricted stock units is 218,212 shares. These amounts represented
4.90% and 1.96%, respectively, of the number of shares of common stock issued in the stock offering of Rhinebeck
Bancorp, including the shares issued to Rhinebeck Bancorp, MHC.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-40
Pursuant to terms of the EIP, on August 25, 2020, the Board of Directors granted restricted stock and stock options
to employees and directors. All of the awards granted to date vest annually over a three-year period from the date of the
grant and the term of each option is ten years. As of December 31, 2024, there were 105,146 stock options and
34,778 restricted stock awards that remain available for future grants.
The fair value of each option granted under the EIP is estimated on the date of grant using the Black-Scholes
Option-Pricing Model. The expected volatility is based on the historical volatility of a peer group of comparable SEC-
reporting bank holding companies. The dividend yield assumption is based on the Company’s expectation that it will not
pay dividends. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield
curve in effect at the date of grant. The Company has elected to recognize forfeitures as they occur.
The Company followed SEC safe-harbor guidelines when determining the expected term of the options granted. The
weighted average assumptions used and fair value for options granted under the EIP as of the grant date were as follows:
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . .
0%
Weighted-average expected volatility . . . . . . . . . . . . .
25.45%
Weighted-average risk-free interest rate . . . . . . . . . . .
0.29%
Weighted-average fair value of options granted . . . . .
$1.67
A summary of options under the EIP as of December 31, 2024 is presented below:
Weighted -
Weighted-Average
Number of
Average
Remaining Contractual
Shares
Exercise Price
Term (in Years)
Options outstanding at beginning of year . . . . . . . . . . . . .
436,263 $
6.62
6.64
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(22,000)
6.57
-
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,333)
6.57
-
Options outstanding at December 31, 2024 . . . . . . . . . . . .
412,930 $
6.62
5.23
Options exercisable at December 31, 2024 . . . . . . . . . . . .
412,930 $
6.62
5.23
The aggregate intrinsic value of the options outstanding and exercisable, which fluctuates based on changes in the
fair market value of the Company’s stock, at December 31, 2024, was $1,260. The aggregate intrinsic value represents
the total pre-tax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of
period and the weighted-average exercise price, multiplied by the number of shares) that would have been received by
the option holders had all option holders exercised their options on December 31, 2024.
As of December 31, 2024, there was no unrecognized compensation cost related to the nonvested stock options
granted under the EIP, as all options were fully vested at December 31, 2023.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-41
The following table summarizes the Company’s restricted stock activity for the year ended December 31, 2024:
Weighted-Average
Number
Grant Date
of Shares
Fair Value per Share
Non-vested restricted stock at beginning of year . . . . . . . . . . . . . . . . . . . . .
- $
-
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,000
7.94
Non-vested restricted stock at December 31, 2024 . . . . . . . . . . . . . . . . . . . .
15,000 $
7.94
As of December 31, 2024, there was $100 of unrecognized compensation cost related to the nonvested restricted
stock awards granted under the EIP. The cost is expected to be recognized over a remaining period of 2.52 years.
No fair value was assigned to vested stock options or restricted stock during the year ended December 31, 2024, as
no awards vested during this period. The aggregate fair value of the options and restricted stock awards that vested
during the year ended December 31, 2023 was $245 and $385, respectively.
For the years ended December 31, 2024 and 2023, share-based compensation expense under the plan was $19 and
$396, respectively.
Pension Plan
The Bank maintains a noncontributory defined benefit pension plan covering substantially all of its employees
21 years of age or older who have completed at least one year of service. The Bank’s defined benefit plan was frozen as
of June 30, 2012.
The following table sets forth the plan’s funded status and amounts recognized in the Company’s consolidated
statements of financial condition:
December 31,
2024
2023
Projected and accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . $ (16,652) $ (17,868)
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,916 18,062
Funded status included in accrued expenses and other liabilities . . . . . . $ 1,264 $
194
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-42
The following table details the plan’s funded status:
2024
2023
Change in benefit projected obligation:
Projected benefit obligation at beginning of year . . . . . . . . $
17,868
$
17,138
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-
-
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
853
861
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,301)
570
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(768)
(701)
Projected benefit obligation at end of year . . . . . . . . . . . .
16,652
17,868
Change in plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . .
18,062
16,906
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . .
622
1,857
Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-
-
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(768)
(701)
Fair value of plan assets at end of year . . . . . . . . . . . . . . .
17,916
18,062
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,264
$
194
In 2024, the net actuarial gain in the projected benefit obligation resulted primarily from an increase in the discount
rate. The gain on plan assets during the fiscal year ended December 31, 2024 of $622 was due to favorable asset market
conditions.
The weighted-average assumptions used by the Company to determine the pension benefit obligation consisted of
the following:
Years ended December 31,
2024
2023
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.50 %
4.90 %
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
N/A
N/A
Amounts recognized in accumulated other comprehensive loss consisted of the following:
Years ended December 31,
2024
2023
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,108 $
4,330
The net periodic pension cost (benefit) and amounts recognized in other comprehensive income are as follows:
Years ended December 31,
2024
2023
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
853 $
861
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(998)
(932)
Amortization of unrecognized loss . . . . . . . . . . . . . . . . . . . . . . . . . . .
298
374
Net periodic cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
153 $
303
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-43
Weighted-average assumptions used by the Company to determine the net periodic pension cost consisted of the
following:
Years ended December 31,
2024
2023
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.90 %
5.15 %
Expected long-term return on plan assets . . . . . . . . . . . . . . . . . . . . . .
6.00 %
6.00 %
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
N/A
N/A
The expected long-term return on plan assets assumption was developed as a weighted average rate based on the
target asset allocation of the plan and the Long-Term Capital Market Assumptions for the corresponding fiscal year end.
Plan assets are invested in pooled separate accounts consisting of underlying investments in eight diversified investment
funds.
As of December 31, 2024, the investment funds included five equity funds and three bond funds. As of
December 31, 2023, the investment funds included six equity funds and two bond funds. Each fund has its own
investment objectives, investment strategies and risks, as detailed in the Plan’s investment policy statement. The
Company determines the appropriate strategic asset allocation versus plan liabilities, as governed by the investment
policy statement.
The assets of the plan are invested under the supervision of the Company’s investment committee in accordance
with the investment policy statement. The investment options of the plan are chosen in a manner consistent with
generally accepted standards of fiduciary responsibility. The investment performance of the Company’s individual
investment managers, with the assistance of the Company’s investment consultant, is monitored on a quarterly basis and
is reviewed at least annually relative to the objectives and guidelines as stated in the Company’s investment policy
statement.
The fair value of the Company’s pension plan assets, by fair value hierarchy, are as follows:
December 31, 2024
Level 1
Level 2
Level 3
Total
Assets:
Investment in separate accounts
Fixed income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
12,489
$
—
$
—
$
12,489
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,427
—
—
5,427
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . .
$
17,916
$
—
$
—
$
17,916
December 31, 2023
Level 1
Level 2
Level 3
Total
Assets:
Investment in separate accounts
Fixed income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
12,293
$
—
$
—
$
12,293
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,769
—
—
5,769
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . .
$
18,062
$
—
$
—
$
18,062
The pooled separate accounts are valued at the net asset per unit based on either the observable net asset value of the
underlying investment or the net asset value of the underlying pool of securities. Net asset value is based on the value of
the underlying assets owned by the fund, minus its liabilities and then divided by the number of shares outstanding.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-44
Benefit payments are as follows:
Year ended December 31,
2024
2023
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
768 $
701
As of December 31, 2024, the following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid:
Fiscal Year Ending
Pension Benefits
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
930
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
950
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,010
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,060
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,130
2030 – 2034 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,050
The Company made no contributions to the plan in either 2024 or 2023.
Defined Contribution Plan
The Company sponsors a 401(k) defined contribution plan. Participants are permitted, in accordance with the
provisions of Section 401(k) of the Internal Revenue Code, to contribute up to 25% of their earnings (as defined) into the
plan with the Company matching up to 6%, subject to Internal Revenue Service limitations. The Company’s
contributions charged to operations amounted to $1,056 and $1,077 for the years ended December 31, 2024 and 2023,
respectively.
Bank Owned Life Insurance
The Company has an investment in and is the beneficiary of life insurance policies on the lives of certain officers
and directors. The purpose of these life insurance policies is to provide income through the appreciation in cash
surrender value of the policies, which is expected to offset the cost of the deferred compensation plans. These policies
had aggregate cash surrender values of $30,193 and $30,031 at December 31, 2024 and 2023, respectively. Net earnings
on these policies aggregated $751 and $665 for the years ended December 31, 2024 and 2023, respectively, which are
included in non-interest income in the consolidated statements of income.
Deferred Compensation Arrangements
Directors’ Plan, (formerly the “Trustees Plan”)
The Company’s 1991 Plan (the “Directors’ Plan”) covers directors who elect to defer fees earned. Under the terms
of the Directors’ Plan, each participant may elect to defer all or part of their annual director’s fees. Upon resignation,
retirement, or death, the participants’ total deferred compensation, including earnings thereon, will be paid out. At
December 31, 2024 and 2023, $3,804 and $3,278, respectively, are included in accrued expenses and other liabilities,
which represents cumulative amounts deferred and earnings thereon. Total expense related to the Directors’ Plan years
ended December 31, 2024 and 2023 were $255 and $207, respectively, which are included in non-interest expense in the
consolidated statements of income.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-45
Executive Long-Term Incentive and Retention Plan
The Company maintains an Executive Long-Term Incentive and Retention Plan (the “Executive Plan”).
Participation in the Executive Plan is limited to officers of the Company designated as participants by the Board of
Directors and who filed a properly completed and executed participation agreement in accordance with the terms of the
Executive Plan. Under the Executive Plan, the Board of Directors may grant annual cash incentive awards equal to
a percentage of a participant’s base salary at the rate in effect on the last day of the Plan year, as determined by the
Board of Directors based on the attainment of criteria established annually by the Board of Directors. Incentive awards
under the Executive Plan are credited to the participant’s incentive benefit account as of the last day of the Executive
Plan year to which the award relates and earn interest at a rate determined annually by the Board of Directors.
Participants vest in their benefit accounts in accordance with the vesting schedule approved by the Board of Directors,
which ranges from one to five years of service. At December 31, 2024 and 2023, $1,653 and $1,962, respectively, is
included in accrued expenses and other liabilities, which represents the cumulative amounts deferred and earnings
thereon. The Company recognized expenses of $238 and $307 for the years ended December 31, 2024 and 2023,
respectively, related to this plan and which are included in salaries and employee benefits expense in the consolidated
statements of income.
Group Term Replacement Plan
Under the terms of the “Group Term Replacement Plan”, the Company provides postretirement life insurance
benefits to certain officers. The liability related to these postretirement benefits is being accrued over the individual
participants’ service period and aggregated $1,711 and $1,642 at December 31, 2024 and 2023, respectively. The
Company recognized expenses of $69 and $61 for the years ended December 31, 2024 and 2023, respectively, related to
this plan which are included in salaries and employee benefits expense in the consolidated statements of income.
Other Director and Officer Postretirement Benefits
The Company has individual fee continuation agreements with certain directors and a supplemental retirement
agreement with an executive officer which provide for fixed postretirement benefits to be paid to the directors and the
officer, or their beneficiaries, for periods ranging from 15 to 20 years. In addition, the Company has agreements with
certain directors which provide for certain postretirement life insurance benefits. The liability related to these
postretirement benefits is being accrued over the individual participants’ service period and aggregated $2,113 and
$2,068, respectively, at December 31, 2024 and 2023. The Company recognized expenses of $86 and $79 for the years
ended December 31, 2024 and 2023, respectively, related to these benefits which are included in other non-interest
expenses in the consolidated statements of income.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-46
10. Leases
As of December 31, 2024, the Company leases real estate for seven branch offices and two administrative offices
under various lease agreements. All of our leases are classified as operating leases.
The calculated amount of the right-of-use (“ROU”) assets and lease liabilities are impacted by the length of the lease
term and the discount rate used to present value the minimum lease payments. The Company’s leases have maturities
which range from 2024 to 2048, some of which include lessee options to extend the lease term. If the Company
considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the
calculation of the ROU asset and lease liability. The weighted average remaining life of the lease terms for these leases
was 15.7 and 10.1 years as of December 31, 2024 and 2023, respectively. As most of our leases do not provide an
implicit rate, the Company used its incremental borrowing rate, the rate of interest to borrow on a collateralized basis for
a similar term, at the lease commencement date. The Company calculated a weighted average discount rate of 3.91% and
2.43% in determining the lease liability as of December 31, 2024 and 2023, respectively.
For the years ended December 31, 2024 and 2023, total operating lease costs were $782 and $717, respectively, and
were included in occupancy and other expense. The ROU asset, included in other assets, was $7,307 and $6,239 as of
December 31, 2024 and 2023, respectively. The corresponding lease liability, included in accrued expenses and other
liabilities was $7,386 and $6,307 as of December 31, 2024 and 2023, respectively.
Future minimum payments for operating leases with initial terms of one year or more as of December 31, 2024 were
as follows:
Years ending December 31:
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
757
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
745
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
705
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
708
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
714
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,814
Total future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,443
Amounts representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,057)
Present Value of Net Future Minimum Lease Payments . . . . . . . . . . . . . $ 7,386
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-47
11. Commitments and Contingencies
Legal Matters
The Company is involved in various legal proceedings which have arisen in the normal course of business.
Management believes that resolution of these matters will not have a material effect on the Company’s financial
condition or results of operations.
Employment Agreements
The Company has entered into employment agreements with certain officers. The agreements provide for base
salaries and incentive compensation based on performance criteria outlined in the agreements. The agreements also
provide for insurance, various other benefits and addresses other contractual issues, such as a change of control.
Financial Instruments with Off-Balance-Sheet Risk
In the normal course of business, the Company is a party to financial instruments with off-balance-sheet risk to meet
the financing needs of its customers. These financial instruments include standby letters of credit and commitments to
extend credit, which include new loan commitments and undisbursed portions of construction loans and other lines of
credit. These financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the
amounts recognized in the statements of financial condition. The contractual amounts of those instruments reflect the
extent of involvement the Company has in particular classes of financial instruments.
The contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should
the contract be fully drawn upon, the customer defaults and the value of any existing collateral become worthless. The
Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-
sheet instruments. Financial instruments whose contract amounts represent off-balance sheet credit risk are as follows:
Years ended December 31,
2024
2023
Commitments to extend credit summarized as follows:
Future loan commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,556 $
5,318
Undisbursed construction loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,617 42,482
Undisbursed home equity lines of credit . . . . . . . . . . . . . . . . . . . . . . . . 10,357 10,727
Undisbursed commercial and other line of credit . . . . . . . . . . . . . . . . . 79,107 69,258
Standby letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,022
4,965
Credit card lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,701
—
Loans sold with recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
805
1,873
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 125,165 $ 134,623
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Standby letters of credit are conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. Since these commitments could expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of
the counterparty. Collateral held varies but may include residential and commercial property, deposits and securities.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-48
12. Derivatives
Interest Rate Swaps
The Company enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-
rate loan agreement to a fixed-rate loan agreement. Under these agreements, the Company simultaneously enters into a
variable-rate loan and interest rate swap agreements with a customer. The Company then enters into a corresponding and
offsetting swap agreement with a third party to hedge its exposure created by the customer agreements. The interest rate
swaps with both the customers and third parties are not designated as hedges under FASB ASC Topic 815, Derivatives
and Hedging, and are marked to market through earnings. The fair values of the swaps are recorded as both an asset and
a liability, in other assets and other liabilities, respectively, in equal offsetting amounts for these transactions. Accrued
interest receivable and payable of $152 and $132 related to these swaps is recorded in other assets and other liabilities as
of December 31, 2024 and 2023, respectively.
Summary information regarding these derivatives is presented below:
December 31,
December 31,
2024
2023
Notational amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
151,867
$
65,420
Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,458
$
5,343
Weighted average pay rates . . . . . . . . . . . . . . . . . . . . . . . . .
5.48 %
5.06 %
Weighted average receive rates . . . . . . . . . . . . . . . . . . . . . .
6.67 %
7.49 %
Weighted average maturity (in years) . . . . . . . . . . . . . . . . .
7.45
8.88
Number of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
14
In addition, as of December 31, 2024, there were three contracted forward rate swaps with a notional value of
$19,161 and a fair value of $285 with effective dates at various points in 2025. These forward swaps have a fixed
weighted average pay rate of 6.28% and the related weighted average adjustable receive rates will be determined at the
time the forward swaps become effective. As of December 31, 2023 there were five contracted forward rate swaps with a
notional value of $35,326, a fair value of $935 and a fixed weighted average pay rate of 4.97%.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-49
13. Regulatory Matters
The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure
to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items, as
calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum
amounts and ratios (set forth in the tables below) of total, common equity Tier 1 and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined).
Management believes, as of December 31, 2024 and 2023, that the Bank met all capital adequacy requirements to which
they are subject.
The most recent notification from the FDIC categorized the Bank as “well capitalized” under the regulatory
framework. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, common equity
Tier 1, Tier I risk-based and Tier I leverage ratios as set forth in the table below. There are no conditions or events since
then, which management believes have changed the Bank’s category.
The Bank’s actual capital amounts and ratios were:
To be Well Capitalized under
For Capital Adequacy
Prompt Corrective Action
Actual
Purposes
Provisions
Amount Ratio
Amount Ratio
Amount
Ratio
December 31, 2024
Rhinebeck Bank
Total capital (to risk-weighted assets) . . . . . . $ 135,450 12.63 % $ 85,821
8.00 % $ 107,276
10.00 %
Tier 1 capital (to risk-weighted assets) . . . . . 126,668 11.81 % 64,366
6.00 %
85,821
8.00 %
Common equity tier one capital (to risk
weighted assets) . . . . . . . . . . . . . . . . . . . . . . . . 126,668 11.81 % 48,274
4.50 %
69,729
6.50 %
Tier 1 capital (to average assets) . . . . . . . . . . 126,668 10.07 % 50,292
4.00 %
62,865
5.00 %
December 31, 2023
Rhinebeck Bank
Total capital (to risk-weighted assets) . . . . . . . $ 144,675
12.70 % $ 91,154
8.00 % $ 113,942
10.00 %
Tier 1 capital (to risk-weighted assets) . . . . . . . 136,295
11.96 % 68,365
6.00 % 91,154
8.00 %
Common equity tier one capital (to risk
weighted assets) . . . . . . . . . . . . . . . . . . . . . . . . . 136,295
11.96 % 51,274
4.50 % 74,062
6.50 %
Tier 1 capital (to average assets) . . . . . . . . . . . . 136,295
10.10 % 53,990
4.00 % 67,488
5.00 %
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-50
14. Fair Value
As described in Note 1, the Company uses fair value measurements to record fair value adjustments to certain assets
and liabilities and to determine fair value disclosures. A description of the valuation methodologies used for assets and
liabilities recorded at fair value and for estimating fair value for financial and non-financial instruments not recorded at
fair value, is set forth below.
Cash and Cash Equivalents
The carrying amount is a reasonable estimate of fair value.
Available for Sale Securities
Where quoted prices are available in an active market for identical securities, securities are classified within Level 1
of the valuation hierarchy. Level 1 securities include marketable equity securities and U.S. Treasury obligations. If
quoted prices are not available, then fair values are estimated by using pricing models (i.e., matrix pricing) or quoted
prices of securities with similar characteristics and are classified within Level 2 of the valuation hierarchy. Examples of
such instruments include government agency bonds, mortgage-backed securities and municipal bonds. Level 3 securities
include securities for which significant unobservable inputs are utilized. Available for sale securities are recorded at fair
value on a recurring basis.
FHLB Stock
The carrying value of FHLB stock approximates fair value based on the redemption provisions of the FHLB.
Loans
Loans receivable are carried at cost. For variable rate loans which reprice frequently carrying values are a
reasonable estimate of fair values, adjusted for credit losses inherent in the portfolios. The fair value of fixed rate loans is
estimated by discounting the future cash flows using the year end rates, estimated using local market data, at which
similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, adjusted for
credit losses inherent in the portfolios. The Company does not record loans at fair value on a recurring basis. However,
from time to time, nonrecurring fair value adjustments to collateral-dependent impaired loans are recorded to reflect
partial write-downs based on the observable market price or current appraised value of collateral.
Other Real Estate Owned
Other real estate owned represents real estate acquired through foreclosure and is carried at the lower of cost or fair
value less estimated selling costs. Fair value is based upon independent market prices, appraised values of the collateral
or management’s estimation of the value of the collateral. These assets are included as Level 3 fair values, based upon
the lowest level of input that is utilized in the fair value measurements.
Accrued Interest
The carrying amounts of accrued interest approximate fair value.
Mortgage Servicing Rights
The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-51
estimated future net servicing income. Mortgage servicing rights are carried at the lower of amortized cost or estimated
fair value and are included in other assets on the consolidated statements of financial condition.
Deposits
Deposit liabilities are carried at cost. The fair value of NOW, savings and money market deposits is the amount
payable on demand at the reporting date. The fair value of time certificates of deposit is estimated using a discounted
cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities
estimated using local market data to a schedule of aggregated expected maturities on such deposits.
Mortgagors’ escrow account
The carrying amount is a reasonable estimate of fair value.
Advances from the FHLB
The fair value of the advances is estimated using a discounted cash flow calculation that applies current FHLB
interest rates for advances of similar maturity to a schedule of maturities of such advances.
Subordinated Debt
Based on the floating rate characteristic of these instruments, the carrying value is considered to approximate fair
value.
Off-Balance-Sheet Instruments
Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standings. Such
amounts are not significant.
Loan Level Interest Rate Swaps
The fair value is based on settlement values adjusted for credit risks associated with the counterparties and the
Company and observable market interest rate curves.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-52
The following tables detail the assets that are carried at fair value on a recurring basis as of the periods shown and
indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:
Quoted Prices in
Active Markets
Significant
Significant
for Identical
Observable
Unobservable
Balance
Assets (Level 1) Inputs (Level 2) Inputs (Level 3)
December 31, 2024
Assets:
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . .
$
29,693 $
29,693
$
—
$
—
U.S. government agency mortgage-backed
securities-residential . . . . . . . . . . . . . . . . . . . . . . . . . . .
93,492
—
93,492
—
U.S. government agency securities . . . . . . . . . . . . . . .
21,166
—
21,166
—
Municipal securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,493
—
2,393
100
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,583
—
12,583
—
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
520
—
520
—
Total available for sale securities . . . . . . . . . . . . . . .
159,947
29,693
130,154
100
Loan level interest rate swaps . . . . . . . . . . . . . . . . . . .
6,743
—
6,743
—
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 166,690 $
29,693
$
136,897
$
100
Liabilities:
Loan level interest rate swaps . . . . . . . . . . . . . . . . . . .
$
6,743 $
—
$
6,743
$
—
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,743 $
—
$
6,743
$
—
December 31, 2023
Assets:
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . .
$
24,006
$
24,006
$
—
$
—
U.S. government agency mortgage-backed
securities – residential . . . . . . . . . . . . . . . . . . . . . . . . . .
128,580
—
128,580
—
U.S. government agency securities . . . . . . . . . . . . . . . .
23,158
—
23,158
—
Municipal securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,903
—
2,788
115
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,640
—
12,640
—
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
698
—
698
—
Total available for sale securities . . . . . . . . . . . . . . . .
191,985
24,006
167,864
115
Loan level interest rate swaps . . . . . . . . . . . . . . . . . . . .
6,278
—
6,278
—
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
198,263
$
24,006
$
174,142
$
115
Liabilities:
Loan level interest rate swaps . . . . . . . . . . . . . . . . . . . .
$
6,278
$
—
$
6,278
$
—
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,278
$
—
$
6,278
$
—
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-53
The following tables detail the assets carried at fair value and measured at fair value on a nonrecurring basis as of
December 31, 2024 and 2023 and indicate the fair value hierarchy of the valuation techniques utilized by the Company
to determine the fair value:
Quoted Prices in
Active Markets
Significant
Significant
for Identical
Observable
Unobservable
Balance
Assets (Level 1) Inputs (Level 2) Inputs (Level 3)
December 31, 2024
Individually analyzed loans, with specific
reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
320
$
—
$
—
$
320
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
320
$
—
$
—
$
320
December 31, 2023
Individually analyzed loans, with specific
reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
758
$
—
$
—
$
758
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . .
25
—
—
25
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
783
$
—
$
—
$
783
The Company may record adjustments to the carrying value of loans based on fair value measurements, either as
specific reserves or as partial charge-offs of the uncollectible portions of these loans. For collateral dependent loans, fair
value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a
combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the
appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data
available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for
determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s
financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in
market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s
business, resulting in a Level 3 fair value classification. The fair value of these individually analyzed loans is based on
the fair value of the collateral. Loans with specific reserves that were determined to be collateral dependent are
categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn
required the use of unobservable inputs and assumptions in fair value measurements. Individually analyzed loans
evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow method
as prescribed by ASC 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest
rate which is not a market rate. There were no changes in valuation techniques used during the year ended December 31,
2024.
Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial
properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been
reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well
as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide
statistics.
Loans that were individually analyzed using the fair value of the collateral had recorded investments of $479 and
$972 with valuation allowances of $159 and $214 resulting in fair values of $320 and $758 at December 31, 2024 and
2023, respectively. The valuation allowance represents specific allocations to the allowance for credit losses.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-54
The following table presents additional quantitative information about assets measured at fair value on a
nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
Quantitative Information About Level 3 Fair Value Measurements
Fair Value
Valuation
Unobservable
Range
Estimate
Techniques
Input
(Weighted Average)
December 31, 2024
Individually analyzed loans,
with specific reserves . . . . . . . . . . . . . $
320 Appraisal of collateral (1) Liquidation expenses (3)
0% to 8%
Appraisal adjustments (2)
0% to 20%
December 31, 2023
Individually analyzed loans,
with specific reserves . . . . . . . . . . . . . $
758 Appraisal of collateral (1) Liquidation expenses (3)
0% to 8%
Appraisal adjustments (2)
0% to 20%
Other real estate owned . . . . . . . . . . . .
25 Appraisal of collateral (1) Liquidation expenses (3)
0% to 6%
Appraisal adjustments (2)
0% to 20%
(1) Fair value is generally through independent appraisals of the underlying collateral that generally include various level 3 inputs
which are not identifiable.
(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation
expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraised value.
(3) Estimated costs to sell.
The Company discloses fair value information about financial instruments, whether or not recognized in the
statements of financial condition, for which it is practicable to estimate that value. Certain financial instruments are
excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.
The estimated fair value amounts for 2024 and 2023 have been measured as of their respective reporting dates and
have not been reevaluated or updated for purposes of these financial statements subsequent to those respective dates. As
such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be
different than amounts reported at each year-end.
The fair value estimates presented and discussed are based on pertinent information available to management as of
the dates specified. The estimated fair value amounts are based on the exit price notion set forth by ASC 820. Although
management is not aware of any factors that would significantly affect the estimated fair values, such amounts have not
been comprehensively revalued for purposes of these consolidated financial statements since the balance sheet dates.
Therefore, current estimates of fair value may differ significantly from the amounts presented herein.
The information presented should not be interpreted as an estimate of the fair value of the entire Company since a
fair value calculation is only required for a limited portion of the Company’s assets and liabilities. Due to the wide range
of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the
Company’s disclosures and those of other companies may not be meaningful.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-55
As of the following dates, the carrying value and fair values of the Company’s financial instruments were:
Fair Value Measurements at
December 31, 2024 Using
Carrying Value
Level 1
Level 2
Level 3
Total
Financial Assets:
Cash and cash equivalents . . . . . . . . . . . . . $
37,484
$
37,484
$
—
$
—
$
37,484
Available for sale securities . . . . . . . . . . .
159,947
29,693
130,154
100
159,947
Loan level interest rate swaps . . . . . . . . . .
6,743
—
6,743
—
6,743
FHLB stock . . . . . . . . . . . . . . . . . . . . . . . .
3,960
—
3,960
—
3,960
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . .
971,779
—
—
955,123
955,123
Accrued interest receivable . . . . . . . . . . . .
4,435
—
4,435
—
4,435
Mortgage servicing rights . . . . . . . . . . . . .
1,592
—
—
4,370
4,370
Financial Liabilities:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,020,783
$
—
$ 968,878
$
—
$ 968,878
Mortgagors' escrow accounts . . . . . . . . . . .
9,425
—
9,425
—
9,425
FHLB advances . . . . . . . . . . . . . . . . . . . . .
69,773
—
69,071
—
69,071
Subordinated debt . . . . . . . . . . . . . . . . . . .
5,155
—
5,155
—
5,155
Loan level interest rate swaps . . . . . . . . . .
6,743
—
6,743
—
6,743
Accrued interest payable . . . . . . . . . . . . . .
943
—
943
—
943
Fair Value Measurements at
December 31, 2023 Using
Carrying Value
Level 1
Level 2
Level 3
Total
Financial Assets:
Cash and cash equivalents . . . . . . . . . . . . . $
22,129
$
22,129
$
—
$
—
$
22,129
Available for sale securities . . . . . . . . . . .
191,985
24,006
167,864
115
191,985
Loan level interest rate swaps . . . . . . . . . .
6,278
—
6,278
—
6,278
FHLB stock . . . . . . . . . . . . . . . . . . . . . . . .
6,514
—
6,514
—
6,514
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . .
1,008,851
—
—
979,037
979,037
Accrued interest receivable . . . . . . . . . . . .
4,616
—
4,616
—
4,616
Mortgage servicing rights . . . . . . . . . . . . .
1,977
—
—
4,720
4,720
Financial Liabilities:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,030,503
$
—
$ 948,140
$
—
$ 948,140
Mortgagors' escrow accounts . . . . . . . . . . .
9,274
—
9,274
—
9,274
FHLB advances . . . . . . . . . . . . . . . . . . . . .
128,064
—
127,592
—
127,592
Subordinated debt . . . . . . . . . . . . . . . . . . .
5,155
—
5,155
—
5,155
Loan level interest rate swaps . . . . . . . . . .
6,278
—
6,278
—
6,278
Accrued interest payable . . . . . . . . . . . . . .
1,488
—
1,488
—
1,488
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-56
15. Accumulated Other Comprehensive Loss
The activity in accumulated other comprehensive loss for the years ended December 31, 2024 and 2023, is as
follows:
Accumulated Other Comprehensive Loss(1)
Unrealized (losses)
gains on
Defined Benefit
available for sale
Pension Plan
securities
Total
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(3,421) $
(26,077) $ (29,498)
Other comprehensive gain before reclassifications . . . . . . . . . . . . . . . .
730
2,924
3,654
Amounts reclassified from accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
236
12,673 12,909
Period change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
966
15,597 16,563
Balance at December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(2,455) $
(10,480) $ (12,935)
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(3,998) $
(28,191) $ (32,189)
Other comprehensive loss before reclassifications . . . . . . . . . . . . . . . . .
282
2,114
2,396
Amounts reclassified from accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
295
—
295
Period change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
577
2,114
2,691
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(3,421) $
(26,077) $ (29,498)
(1) All amounts are net of tax. Related income tax expense or benefit is calculated using an income tax rate of 21.0%.
Details about accumulated other comprehensive loss components are as follows:
Amount Reclassified from
Accumulated Other Comprehensive
Income for the Year Ended
Affected Line Item in the Consolidated
December 31,
Statement of Income
2024
2023
Securities available for sale(1):
Net securities losses reclassified into earnings . . . . . . . $
(16,041) $
—
Net realized loss on sales of
securities
Related income tax expense . . . . . . . . . . . . . . . . . . . .
3,368
—
Provision for income taxes
Net effect on accumulated other comprehensive
loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,673)
—
Defined benefit pension plan(2):
Amortization of net loss and prior service costs . . . . . .
(298)
(374)
Other non-interest expense
Related income tax expense . . . . . . . . . . . . . . . . . . . .
62
79
Provision for income taxes
Net effect on accumulated other comprehensive
gain or loss for the period . . . . . . . . . . . . . . . . . . . . . .
(236)
(295)
Total reclassifications for the period . . . . . . . . . . . . . $
(12,909) $
(295)
(1) For additional details related to unrealized gains and losses on securities and related amounts reclassified from accumulated other
comprehensive loss see Note 2, “Available for Sale Securities.”
(2) Included in the computation of net periodic pension cost. See Note 9, “Employee Benefits” for additional details.
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(In thousands, except share and per share data)
F-57
16. Segment Reporting
The Company is a bank holding company, whose principal activity is the ownership and management of its wholly-
owned subsidiary, Rhinebeck Bank. As a community-focused financial institution, the Company’s operations primarily
involve offering loan and deposit products and providing financial advisory services to customers. Since management
evaluates performance and makes strategic decisions based on a single, integrated banking operation, the Company is
considered to have one reportable segment for financial reporting purposes.
Management makes operating decisions and assesses performance based on an ongoing review of these banking
operations, The accounting policies of the banking operations segment are the same as those described in the summary
of significant accounting policies. The Company's reportable segment is determined by the Chief Executive Officer, who
serves as the chief operating decision maker (“CODM”). The CODM assesses the Company's products and services,
which primarily consist of banking operations, and evaluates performance based on financial data provided.
Interest income from loans and other earning assets, and income from fee-based businesses provide banking
operation revenue. Interest expense on deposits and other sources of funding, provisions for credit losses, and operating
expenses, primarily salaries and employee benefits, occupancy, furniture and equipment, and data processing and
communications, provide the significant expenses of banking operations. The Company currently operates as a single-
segment and all operations are domestic
17. Earnings Per Share
Basic earnings per share represent income available to common stockholders divided by the weighted-average
number of common shares outstanding during the period. Diluted earnings per share is computed in a manner similar to
that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to
include the number of incremental shares (computed using the treasury method) that would have been outstanding if all
potentially dilutive common stock equivalents (such as options) were issued during the period. Unearned ESOP shares
are not deemed outstanding for earnings per share calculations.
Year Ended December 31,
2024
2023
Net (loss) income applicable to common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(8,620) $
4,395
Average number of common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,074,170
11,127,247
Less: Average unearned ESOP shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
316,420
338,238
Average number of common shares outstanding used to calculate
basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,757,750
10,789,009
Additional common stock equivalents (nonvested stock) used to
calculate diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
25,652
Additional common stock equivalents (stock options) used to calculate
diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
40,891
Weighted-average common shares and common stock equivalents used
to calculate diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,757,750
10,855,552
Earnings (loss) per Common share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(0.80) $
0.41
Diluted (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(0.80) $
0.40
(1) Because the Company was in a net loss position for the year ended December 31, 2024, diluted net loss per share is the same as
basic net loss per share, as the inclusion of potentially dilutive common shares would have been anti-dilutive. The weighted average
anti-dilutive common shares not included in the calculation of diluted earnings per share were 97,954.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RHINEBECK BANCORP, INC.
March 25, 2025
By: /s/ Michael J. Quinn
Michael J. Quinn
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Exchange of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signatures
Title
Date
/s/ Michael J. Quinn
President, Chief Executive Officer and Director
March 25, 2025
Michael J. Quinn
(Principal Executive Officer)
/s/ Kevin Nihill
Chief Financial Officer
March 25, 2025
Kevin Nihill
(Principal Financial Officer)
/s/ Phillip Lekanides
Vice President, Controller
March 25, 2025
Phillip Lekanides
(Principal Accounting Officer)
/s/ William C. Irwin
Chairman of the Board
March 25, 2025
William C. Irwin
/s/ Frederick Battenfeld
Director
March 25, 2025
Frederick Battenfeld
/s/ Donald E. Beeler Jr.
Director
March 25, 2025
Donald E. Beeler Jr.
/s/ Christopher W. Chestney
Director
March 25, 2025
Christopher W. Chestney
/s/ Freddimir Garcia
Director
March 25, 2025
Freddimir Garcia
/s/ Steven Howell
Director
March 25, 2025
Steven Howell
/s/ Shannon Martin LaFrance
Director
March 25, 2025
Shannon Martin LaFrance
/s/ Suzanne Rhulen-Loughlin
Director
March 25, 2025
Suzanne Rhulen-Loughlin
(This page intentionally left blank)
(This page intentionally left blank)
BOARD OF DIRECTORS
MANAGEMENT TEAM
Stephanie Baran
VP, Multi-Site Branch Manager
Jeanine Borko
SVP, Human Resources
Megan Bourgoin
VP, Compliance Officer/Assistant Secretary
David Curry
VP, Commercial Lender, Hudson Valley West
Michelle Cussick-Kelsoe
VP, Information Technology Project Manager
Catherine Kantrowitz
VP, Residential Lending
Rajwinder Kaur
VP, Commercial Lender, Capital Market
Richard Kolosky
SVP, Commercial Lending Director
Patrick Laffin
SVP, Deposit and Loan Operations
Phillip Lekanides
VP, Controller & Principal Accounting Officer
Michael Liguori
VP, Commercial Lender, Hudson Valley East
Tonya McCaughey
VP, Area Retail Leader
Sharon Nameth
VP, Collections Manager
Brooke O’Connell
VP, Area Retail Leader
Cassandra Paupst
VP, Credit Administration Manager
John Rose
SVP, Consumer Lending
Peter Saridakis
SVP, Marketing
Dawn Scherer
SVP, Information Technology
Lisa Schumm
VP, Financial Reporting
Roy Shemitz
SVP, Commercial Lender, Hudson Valley West
Yvette Temple
VP, Retail Operations Leader
Kenneth Zwicklbauer
SVP, Commercial Lender, Capital Market
SHAREHOLDER INFORMATION
William C. Irwin
Chairman of the Board
Frederick L. Battenfeld
(Rhinebeck Bank Board only)
Donald E. Beeler, Jr.
Michael J. Quinn
Suzanne Rhulen-Loughlin
Louis Tumolo, Jr. DVM
(Rhinebeck Bank Board only)
Christopher W. Chestney
Freddimir Garcia
Steven E. Howell
Shannon Martin LaFrance
Annual Meeting
The annual meeting, scheduled for Wednesday, May 21, 2025 at 11:00 a.m.,
Eastern time, will be held in person at Rhinebeck Bank’s corporate
headquarters located at 2 Jefferson Plaza, Poughkeepsie, NY 12601.
Stock Listing
The common stock is traded on the NASDAQ Capital Market under the
ticker symbol RBKB.
Auditor
Legal Counsel
Wolf & Company, P.C.
Luse Gorman, PC
255 State Street
5335 Wisconsin Ave., NW, Suite 780
Boston, MA 02109 Washington, DC 20015
Transfer Agent
Continental Stock Transfer & Trust Co.
1 State Street, 30th Floor
New York, NY 10004
Shareholder Inquiries
Michael J. Quinn - President & CEO - Rhinebeck Bank
(845) 790-1501 MQuinn@RhinebeckBank.com
EXECUTIVE OFFICERS
Michael J. Quinn
President & Chief Executive Officer
Jamie J. Bloom
EVP, Chief Banking Officer &
Chief Operating Officer
Philip J. Bronzi
Chief Lending Officer
Mark Malone
Chief Retail Officer
James T. McCardle III
Chief Credit Officer
Karen E. Morgan-D’Amelio
Chief Risk Officer &
General Counsel / Corporate Secretary
Kevin Nihill
Chief Financial Officer
Arlington
708 Dutchess Turnpike
Poughkeepsie, NY 12603
East Fishkill
2523 Route 52
Hopewell Junction, NY 12533
Fishkill
1022 Main Street
Fishkill, NY 12524
Goshen
252 Main Street
Goshen, NY 10924
Hyde Park
1075 Violet Avenue
Hyde Park, NY 12538
Kingston
27 Main Street
Kingston, NY 12401
Mid Hudson Center
3432 North Road
Poughkeepsie, NY 12601
Middletown
357 East Main Street
Middletown, NY 10940
Newburgh
456 Broadway
Newburgh, NY 12550
Red Hook
7350 South Broadway
Red Hook, NY 12571
Rhinebeck
6414 Montgomery Street
Rhinebeck, NY 12572
South Road
1898 South Road
Poughkeepsie, NY 12601
Warwick
62 Main Street, Suite 1
Warwick, NY 10990
Branches
Corporate Offices
2 Jefferson Plaza
Poughkeepsie, NY 12601
Rhinebeck Asset Management
a division of Rhinebeck Bank
2 Jefferson Plaza, 1st Floor
Poughkeepsie, NY 12601
Rhinebeck Bank - Representative Office
2 Jefferson Plaza, 1st Floor
Poughkeepsie, NY 12601
Rhinebeck Bank - Representative Office
100 Great Oaks Blvd., Suite 118A
Albany, NY 12203