Rhinebeck Bancorp Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

10-Q 1 rbkb-20200630x10q.htm 10-Q

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United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

⌧ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2020

◻ 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 incorporation or organization)		(I.R.S. Employer 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

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 12 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 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)


Large accelerated filer ◻		Accelerated filer ◻
Non-accelerated filer ⌧		Smaller reporting company ⌧
		Emerging growth 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ◻ NO ⌧

As of August 1, 2020, there were 11,133,290 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

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TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	2

	Consolidated Statements of Financial Condition at June 30, 2020 and December 31, 2019	2

	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2020 and 2019	3

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019	4

	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019	5

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures	47

PART II. OTHER INFORMATION		47

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	49

	SIGNATURES	50

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EXPLANATORY NOTE

Rhinebeck Bancorp, Inc. (the “Company,” “we” or “our”) was formed to serve as the mid-tier stock holding company for Rhinebeck Bank in connection with the reorganization of Rhinebeck Bank and its mutual holding company, Rhinebeck Bancorp, MHC, into the two-tier mutual holding company structure. The reorganization was completed on January 16, 2019. Prior to January 16, 2019, the Company had no assets or liabilities and had not conducted any business activities other than organizational activities. Accordingly, the unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q relate solely to the consolidated financial results and financial position of Rhinebeck Bancorp, MHC and Rhinebeck Bank for any period prior to January 16, 2019.

The unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements, and related notes, of Rhinebeck Bancorp, Inc. and Rhinebeck Bank at and for the year ended December 31, 2019 contained in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 26, 2020.

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PART 1 — FINANCIAL INFORMATION

ITEM 1.

Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands, except share and per share data)


	June 30,		December 31,
	2020		2019
Assets
Cash and due from banks	$	74,574	$	11,978
Available for sale securities (at fair value)		105,138		114,832
Loans receivable (net of allowance for loan losses of $8,572 and $5,954, respectively)		887,320		793,471
Federal Home Loan Bank stock		3,162		3,435
Accrued interest receivable		3,676		2,903
Cash surrender value of life insurance		18,650		18,457
Deferred tax assets (net of valuation allowance of $1,582 and $1,202, respectively)		3,033		2,255
Premises and equipment, net		18,622		18,338
Other real estate owned		1,178		1,417
Goodwill		1,410		1,410
Intangible assets, net		220		241
Other assets		11,347		5,209
Total assets	$	1,128,330	$	973,946
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Noninterest bearing	$	247,800	$	179,236
Interest bearing		662,239		594,107
Total deposits		910,039		773,343

Mortgagors’ escrow accounts		11,366		8,106
Advances from the Federal Home Loan Bank		59,016		66,304
Federal Reserve Bank borrowings		12,080		—
Subordinated debt		5,155		5,155
Accrued expenses and other liabilities		16,994		11,156
Total liabilities		1,014,650		864,064

Stockholders’ Equity
Preferred stock (par value $0.01 per share; 5,000,000 authorized, no shares issued)		—		—
Common stock (par value $0.01 per share; 25,000,000 authorized, 11,133,290 issued and outstanding)		111		111
Additional paid-in capital		45,852		45,869
Unearned common stock held by the employee stock ownership plan ("ESOP")		(4,037)		(4,146)
Retained earnings		74,575		72,152
Accumulated other comprehensive loss:
Net unrealized gain (loss) on available for sale securities, net of taxes		1,842		(195)
Defined benefit pension plan, net of taxes		(4,663)		(3,909)
Total accumulated other comprehensive loss		(2,821)		(4,104)
Total stockholders’ equity		113,680		109,882
Total liabilities and stockholders’ equity	$	1,128,330	$	973,946

See accompanying notes to consolidated financial statements

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Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Interest and Dividend Income
Interest and fees on loans	$	10,569	$	9,401	$	20,615	$	18,116
Interest and dividends on securities		631		713		1,314		1,321
Other income		13		6		24		41
Total interest and dividend income		11,213		10,120		21,953		19,478
Interest Expense
Interest expense on deposits		1,859		1,641		3,876		3,023
Interest expense on borrowings		377		558		779		964
Total interest expense		2,236		2,199		4,655		3,987
Net interest income		8,977		7,921		17,298		15,491
Provision for loan losses		2,255		780		3,455		1,560
Net interest income after provision for loan losses		6,722		7,141		13,843		13,931
Noninterest Income
Service charges on deposit accounts		495		714		1,147		1,412
Net realized loss on sales and calls of securities		—		(40)		(29)		(40)
Net gain on sales of loans		941		251		1,406		417
Increase in cash surrender value of life insurance		96		100		193		200
Other real estate owned income		—		1		—		11
Investment advisory income		250		329		562		542
Other		(32)		78		31		155
Total noninterest income		1,750		1,433		3,310		2,697
Noninterest Expense
Salaries and employee benefits		3,995		3,942		8,147		7,830
Occupancy		878		898		1,728		1,793
Data processing		361		343		715		650
Professional fees		353		360		675		626
Marketing		82		147		225		302
FDIC deposit insurance and other insurance		197		147		365		288
Other real estate owned expense		9		—		26		38
Amortization of intangible assets		10		11		21		22
Other		880		1,200		2,162		2,417
Total noninterest expense		6,765		7,048		14,064		13,966
Income before income taxes		1,707		1,526		3,089		2,662
Provision for income taxes		359		305		666		530
Net income	$	1,348	$	1,221	$	2,423	$	2,132

Earnings per common share:
Basic	$	0.13	$	0.11	$	0.23	$	0.20
Diluted	$	0.13	$	0.11	$	0.23	$	0.20

Weighted average shares outstanding, basic		10,726,867		10,705,047		10,724,140		10,702,320
Weighted average shares outstanding, diluted		10,726,867		10,705,047		10,724,140		10,702,320

See accompanying notes to consolidated financial statements

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Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net Income	$	1,348	$	1,221	$	2,423	$	2,132
Other Comprehensive (Loss) Income:
Unrealized holding (losses) gains arising during the period		(722)		1,889		2,550		3,206
Reclassification adjustment for losses included in net realized loss on sales and calls of securities on the consolidated statements of income		—		40		29		40
Net unrealized (losses) gains on available for sale securities		(722)		1,929		2,579		3,246
Tax effect (a)		152		(406)		(542)		(682)
Unrealized (losses) gains on available for sale securities, net of tax		(570)		1,523		2,037		2,564
Defined benefit pension plan:
Actuarial loss arising during the period		(1,377)		(41)		(1,097)		(61)
Reclassification adjustment for amortization of net actuarial loss (b)		71		89		143		179
Total		(1,306)		48		(954)		118
Tax effect (c)		274		(10)		200		(25)
Defined benefit pension plan (loss) gain, net of tax		(1,032)		38		(754)		93
Other comprehensive (loss) income		(1,602)		1,561		1,283		2,657
Total Comprehensive (Loss) Income	$	(254)	$	2,782	$	3,706	$	4,789

(a)	Includes $0 and $6 for the three and six months ended June 30, 2020, respectively, and $8 for the three and six months ended June 30, 2019, for tax effect of realized losses which are included in the provision for income taxes on the consolidated statements of income.

(b)	Included in other noninterest expense on the consolidated statements of income.

(c)

Includes $15 and $30 for the three and six months ended June 30, 2020, respectively, and $19 and $38 for the three and six months ended June 30, 2019, respectively, for tax effect of amortization of net actuarial loss included in the provision for income taxes on the consolidated statements of income.

See accompanying notes to consolidated financial statements

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Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(Dollars in thousands, except share and per share data)


					Unearned				Accumulated
			Additional		Common				Other
	Common		Paid-in		Stock Held		Retained		Comprehensive
	Stock		Capital		by the ESOP		Earnings		Loss		Total
Balance at December 31, 2018	$	—	$	100	$	—	$	66,189	$	(7,012)	$	59,277

Net income		—		—		—		911		—		911
Other comprehensive income		—		—		—		—		1,096		1,096
Common Stock and proceeds of offering		111		45,754		—		—		—		45,865
Unearned common stock held by ESOP		—		—		(4,364)		—		—		(4,364)
ESOP shares committed to be allocated		—		9		55		—		—		64

Balance at March 31, 2019	$	111	$	45,863	$	(4,309)	$	67,100	$	(5,916)	$	102,849

Net income		—		—		—		1,221		—		1,221
Other comprehensive income		—		—		—		—		1,561		1,561
Common Stock and proceeds of offering		—		(10)		—		—		—		(10)
ESOP shares committed to be allocated		—		8		54		—		—		62
Balance at June 30, 2019	$	111	$	45,861	$	(4,255)	$	68,321	$	(4,355)	$	105,683

Balance at December 31, 2019	$	111	$	45,869	$	(4,146)	$	72,152	$	(4,104)	$	109,882

Net income		—		—		—		1,075		—		1,075
Other comprehensive income		—		—		—		—		2,885		2,885
ESOP shares committed to be allocated		—		—		55		—		—		55

Balance at March 31, 2020	$	111	$	45,869	$	(4,091)	$	73,227	$	(1,219)	$	113,897

Net income		—		—		—		1,348		—		1,348
Other comprehensive loss		—		—		—		—		(1,602)		(1,602)
ESOP shares committed to be allocated		—		(17)		54		—		—		37

Balance at June 30, 2020	$	111	$	45,852	$	(4,037)	$	74,575	$	(2,821)	$	113,680

See accompanying notes to consolidated financial statements

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Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands, except share and per share data)


	Six Months Ended June 30,
	2020		2019
Cash Flows from Operating Activities
Net income	$	2,423	$	2,132
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion of premiums and discounts on investments, net		285		85
Net realized loss on sales and calls of securities		29		40
Provision for loan losses		3,455		1,560
Loans originated for sale		(46,347)		(19,458)
Proceeds from sale of loans		46,621		17,941
Net gain on sale of loans		(1,406)		(417)
Amortization of intangible assets		21		22
Depreciation and amortization		669		645
Deferred income tax benefit		(1,119)		(260)
Increase in cash surrender value of insurance		(193)		(200)
Increase in accrued interest receivable		(773)		(351)
Expense of allocated ESOP shares		92		—
(Increase) decrease in other assets		(6,138)		949
Increase in accrued expenses and other liabilities		4,884		792
Net cash provided by operating activities		2,503		3,480
Cash Flows from Investing Activities
Proceeds from sales and calls of securities		6,997		4,990
Proceeds from maturities and principal repayments of securities		15,108		6,877
Purchases of securities		(10,146)		(18,832)
Net sales (purchases) of FHLB Stock		273		(1,472)
Net increase in loans		(96,173)		(58,726)
Purchases of bank premises and equipment		(953)		(451)
Net increase of other real estate owned		(31)		—
Proceeds from sale of other real estate owned		270		107
Net cash used in investing activities		(84,655)		(67,507)
Cash Flows from Financing Activities
Net increase (decrease) in demand deposits, NOW, money market and savings accounts		122,381		(5,044)
Net increase in time deposits		14,315		37,484
Increase in mortgagors' escrow accounts		3,260		2,675
Net increase (decrease) in short-term debt		11,923		(4,369)
Net (decrease) increase in long-term debt		(7,131)		32,312
Proceeds of stock subscriptions		—		9,814
Return of unfulfilled stock subscriptions		—		(41,083)
Offering expenses		—		(1,898)
Loan to ESOP		—		(4,364)
Return of capital to Rhinebeck Bancorp, MHC		—		(121)
Net cash provided by financing activities		144,748		25,406
Net increase (decrease) in cash and due from banks		62,596		(38,621)
Cash and Due from Banks
Beginning balance		11,978		50,590
Ending balance	$	74,574	$	11,969
Supplemental Disclosures of Cash Flow Information
Cash paid for:
Interest	$	4,716	$	3,933
Income taxes	$	358	$	740

See accompanying notes to consolidated financial statements

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Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

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. 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 eleven branches and two representative offices located in Dutchess, Ulster, Orange, and Albany counties. 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 unaudited consolidated financial statements reflect all adjustments, which in the opinion of management, are necessary for a fair presentation of the results of the interim periods and are of a normal and recurring nature. Operating results for the three and six month periods ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or for any other period.

For more information regarding the Company’s significant accounting policies, see the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission. As of June 30, 2020, the critical accounting policies of the Company have not changed materially from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019.

Basis of Financial Statements Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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 loan losses, the valuation of securities and other real estate owned, the evaluation of investment securities for other-than-temporary impairment, the evaluation of goodwill for impairment, the valuation of deferred tax assets and the determination of pension obligations.

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.

Reclassifications

Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year’s presentation.

COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a global pandemic, which continues to spread throughout the United States and around the world. The declaration of the global pandemic indicated that almost all public commerce and related business activities were, to varying degrees, curtailed with the goal of decreasing the rate of new infections. The outbreak of COVID-19

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Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

adversely impacted a broad range of industries in which the Company’s customers operate and impaired their ability to fulfill their financial obligations to the Company to a degree. In March, the Federal Open Market Committee brought the target range for the federal funds rate to near zero. These reductions in interest rates and other effects of the COVID-19 outbreak will likely adversely affect the Company’s financial condition and results of operations. As a result of the spread of COVID-19, economic uncertainties have arisen which are likely to negatively impact net interest income, noninterest income, the provision for loan losses and bad debts. Other financial impacts could occur though such potential impacts are unknown at this time.

Impact of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“Topic 842”), which created FASB Accounting Standards Codification (“ASC”) Topic 842 (“ASC 842”) and is intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. The principal change required by ASC 842 related to lessee accounting, is that for operating leases, a lessee is required to (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position, (2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term generally on a straight-line basis, and (3) classify all cash payments within operating activities in the statement of cash flows. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASC 842 also changes disclosure requirements related to leasing activities and requires certain qualitative disclosures along with specific quantitative disclosures. ASC 842 also provides an optional transition method for adoption, under which an entity initially applies ASC 842 at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity's reporting for the comparative periods presented in the financial statements in which it adopts ASC 842 will continue to be in accordance with current GAAP. The Company adopted the provisions of ASC 842 effective January 1, 2020 utilizing the optional transition method and did not restate comparative periods. The Company elected the package of practical expedients permitted under ASC 842's transition guidance, which allows the Company to carryforward its historical lease classifications and its assessment as to whether a contract is or contains a lease. The Company elected to not recognize lease assets and lease liabilities for leases with an initial term of 12 months or less. Upon adoption, the Company recorded an increase in other assets and an increase in other liabilities of approximately $6,700, respectively. See Note 10 of the footnotes to the consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13 on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ASU requires credit losses on most financial assets be measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (“CECL”) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The measurement of expected credit losses is based upon relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. On October 16, 2019, the FASB approved a delay for conversion to the CECL methodology to January 2023 for smaller reporting companies, other public business entities, private companies and non-profits; although early adoption is permitted in 2019. While the Company is currently assessing the effect of ASU No. 2016-13 and has engaged with a software vendor to assist in its efforts; it is unlikely that the Company will early adopt this ASU.

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Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

Emerging Growth Company Status

As an emerging growth company, the Company may delay adoption of new or revised financial accounting standards until such date that the standards are required to be adopted by non-issuer companies. If such standards would not apply to non-issuer companies, no deferral would be applicable. The Company intends to take advantage of the benefits of the extended transition periods allowed under the Jumpstart Our Business Startups Act.

Accordingly, the Company’s consolidated financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. The effective dates of the recent accounting standards reflect those that relate to non-issuer companies.

2. Investment Securities

The amortized cost, gross unrealized gains and losses and fair values of available for sale securities are as follows:


	June 30, 2020
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
U.S. government agency mortgage-backed securities–residential	$	93,577	$	2,235	$	(124)	$	95,688
U.S. government agency securities		5,018		161		—		5,179
Municipal securities⁽¹⁾		1,383		25		—		1,408
Corporate bonds		2,250		33		(15)		2,268
Other		579		16		—		595
Total	$	102,807	$	2,470	$	(139)	$	105,138


	December 31, 2019
U.S. government agency mortgage-backed securities–residential	$	98,842	$	464	$	(828)	$	98,478
U.S. government agency securities		12,049		53		(26)		12,076
Municipal securities⁽¹⁾		1,384		17		(5)		1,396
Corporate bonds		2,250		25		(2)		2,273
Other		555		54		—		609
Total	$	115,080	$	613	$	(861)	$	114,832

¹	The issuers of municipal securities are all within New York State.

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Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The following table presents 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:


	June 30, 2020
	Less Than 12 Months				12 Months or Longer				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. government agency mortgage-backed securities-residential	$	9,080	$	(109)	$	774	$	(15)	$	9,854	$	(124)
Corporate Bonds		985		(15)		—		—		985		(15)
Total	$	10,065	$	(124)	$	774	$	(15)	$	10,839	$	(139)


	December 31, 2019
U.S. government agency mortgage-backed securities-residential	$	35,612	$	(302)	$	27,252	$	(526)	$	62,864	$	(828)
U.S. government agency securities		—		—		7,001		(26)		7,001		(26)
Municipal Securities		490		(5)		—		—		490		(5)
Corporate Bonds		749		(2)		—		—		749		(2)
Total	$	36,851	$	(309)	$	34,253	$	(552)	$	71,104	$	(861)

At June 30, 2020, the Company had 19 individual available-for-sale securities in an unrealized loss position with unrealized losses totaling $139 with an aggregate depreciation of 1.23% from the Company’s amortized cost.

Management believes that none of the unrealized losses on available for sale securities are other-than-temporary because substantially all of the unrealized losses in the Company’s investment portfolio relate to market interest rate changes on debt and mortgage-backed securities issued either directly by the government or from government sponsored enterprises. The Company does not intend to sell the securities and it is not likely that the Company will be required to sell the securities before recovery of their amortized cost basis, which may be maturity; therefore, the Company did not consider those investments to be other-than-temporarily impaired at June 30, 2020.

The amortized cost and fair value of available for sale debt securities at June 30, 2020 and December 31, 2019, 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.

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

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:


	June 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity:
Within 1 year	$	175	$	175	$	175	$	175
After 1 but within 5 years		—		—		7,027		7,001
After 5 but within 10 years		7,801		8,005		7,806		7,899
After 10 years		675		675		675		670
Total Maturities		8,651		8,855		15,683		15,745

Mortgage-backed securities		93,577		95,688		98,842		98,478
Other		579		595		555		609
Total	$	102,807	$	105,138	$	115,080	$	114,832

At June 30, 2020 and December 31, 2019, available for sale securities with a carrying value of $20,732 and $23,782, respectively, were pledged to secure Federal Home Loan Bank of New York (“FHLB”) borrowings. In addition, at June 30, 2020 and December 31, 2019, $733 and $726 of available for sale securities were pledged to secure borrowings at the Federal Reserve Bank of New York (“FRB”), respectively.

During the six months ended June 30, 2020, there was $6,997 in proceeds from the sales of available for sale securities with $29 in gross losses realized.

3. Loans and Allowance for Loan Losses

A summary of the Company’s loan portfolio is as follows:


	June 30,		December 31,
	2020		2019
Commercial real estate loans:
Construction	$	10,339	$	20,354
Non-residential		242,199		228,157
Multi-family		30,145		20,129
Residential real estate loans		41,682		43,726
Commercial and industrial loans⁽¹⁾		175,120		90,554
Consumer loans:
Indirect automobile		365,455		360,569
Home equity		14,804		16,276
Other consumer		9,008		9,752
Total gross loans		888,752		789,517
Net deferred loan costs		7,140		9,908
Allowance for loan losses		(8,572)		(5,954)
Total net loans	$	887,320	$	793,471

⁽¹⁾	Includes $89,092 in U.S. Small Business Administration (“SBA”), paycheck protection program (“PPP”) loans.

At June 30, 2020 and December 31, 2019, the unpaid principal balances of loans held for sale, included in the residential real estate category above, were $2,409 and $2,684, respectively.

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The following tables present the classes of the loan portfolio summarized by the pass category and the criticized and classified categories of special mention and substandard within the internal risk system:


	June 30, 2020
	Pass		Special Mention		Substandard		Total
Commercial real estate:
Construction	$	10,339	$	—	$	—	$	10,339
Non-residential		233,325		4,610		4,264		242,199
Multifamily		29,776		—		369		30,145
Residential real estate		39,127		—		2,555		41,682
Commercial and industrial		173,747		546		827		175,120
Consumer:
Indirect automobile		364,419		—		1,036		365,455
Home equity		14,274		—		530		14,804
Other consumer		8,987		—		21		9,008
Total	$	873,994	$	5,156	$	9,602	$	888,752


	December 31, 2019
	Pass		Special Mention		Substandard		Total
Commercial real estate:
Construction	$	20,354	$	—	$	—	$	20,354
Non-residential		219,485		4,285		4,387		228,157
Multifamily

Price	10.50	EPS	0
Shares	11	P/E	28
MCap	117	P/FCF	16
Net Debt	-18	EBIT	12
TEV	99	TEV/EBIT	8
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-13
10-Q	2020-03-31	Filed 2020-05-14
10-K	2019-12-31	Filed 2020-03-26
10-Q	2019-09-30	Filed 2019-11-14
10-Q	2019-06-30	Filed 2019-08-14
10-Q	2019-03-31	Filed 2019-05-14
10-K	2018-12-31	Filed 2019-03-29
S-1	2018-09-10	Public Filing

8-K	2020-08-25	Officers
8-K	2020-07-30	Earnings, Exhibits
8-K	2020-05-26
8-K	2020-05-06
8-K	2020-05-01
8-K	2020-02-07
8-K	2019-10-31
8-K	2019-10-07
8-K	2019-09-24
8-K	2019-07-26
8-K	2019-05-28
8-K	2019-02-07
8-K	2019-01-16
8-K	2019-01-15
8-K	2019-01-04
8-K	2018-11-09

EX-31.1	rbkb-20200630ex311aa5e81.htm
EX-31.2	rbkb-20200630ex312970962.htm
EX-32.1	rbkb-20200630ex321b42769.htm

RBKB 10Q Quarterly Report

Rhinebeck Bancorp Earnings 2020-06-30