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 | 2020-09-30 | Filed 2020-11-12 |
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 | 2020-10-29 | |
8-K | 2020-10-26 | |
8-K | 2020-08-25 | |
8-K | 2020-07-30 | |
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 |
Part I - Financial Information |
Item 1. |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
Item 4. Controls and Procedures |
Part II - Other Information |
Item 1. Legal Proceedings |
Item 1A. Risk Factors |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. Defaults Upon Senior Securities |
Item 4. Mine Safety Disclosures |
Item 5. Other Information |
Item 6. Exhibits |
EX-31.1 | rbkb-20200930ex3118820c7.htm |
EX-31.2 | rbkb-20200930ex3122809f4.htm |
EX-32.1 | rbkb-20200930ex32124f92c.htm |
Balance Sheet | Income Statement | Cash Flow |
---|---|---|
Assets, Equity
|
Rev, G Profit, Net Income
|
Ops, Inv, Fin
|
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 September 30, 2020
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 | |
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 November 1, 2020, there were 11,133,290 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.
| ||
| | |
2 | ||
| | |
| Consolidated Statements of Financial Condition at September 30, 2020 and December 31, 2019 | 2 |
| | |
| Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2020 and 2019 | 3 |
| | |
| 4 | |
| | |
| 5 | |
| | |
| Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 | 6 |
| | |
| 7 | |
| | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 37 | |
| | |
50 | ||
| | |
50 | ||
| | |
50 | ||
| | |
50 | ||
| | |
51 | ||
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51 | ||
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51 | ||
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51 | ||
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51 | ||
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51 | ||
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| 52 |
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.
1
PART I — FINANCIAL INFORMATION
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands, except share and per share data)
| | September 30, | | December 31, | | ||
|
| 2020 |
| 2019 | | ||
Assets | | | | | | | |
Cash and due from banks | | $ | 51,581 | | $ | 11,978 | |
Available for sale securities (at fair value) | |
| 106,367 | |
| 114,832 | |
Loans receivable (net of allowance for loan losses of $10,563 and $5,954, respectively) | |
| 890,495 | |
| 793,471 | |
Federal Home Loan Bank stock | |
| 2,975 | |
| 3,435 | |
Accrued interest receivable | |
| 3,897 | |
| 2,903 | |
Cash surrender value of life insurance | |
| 18,788 | |
| 18,457 | |
Deferred tax assets (net of valuation allowance of $1,713 and $1,202, respectively) | |
| 3,318 | |
| 2,255 | |
Premises and equipment, net | |
| 18,886 | |
| 18,338 | |
Other real estate owned | |
| 1,127 | |
| 1,417 | |
Goodwill | |
| 1,410 | |
| 1,410 | |
Intangible assets, net | |
| 209 | |
| 241 | |
Other assets | |
| 13,525 | |
| 5,209 | |
Total assets | | $ | 1,112,578 | | $ | 973,946 | |
Liabilities and Stockholders’ Equity | |
|
| |
|
| |
Liabilities | |
|
| |
|
| |
Deposits | |
|
| |
|
| |
Noninterest bearing | | $ | 251,568 | | $ | 179,236 | |
Interest bearing | |
| 664,627 | |
| 594,107 | |
Total deposits | |
| 916,195 | |
| 773,343 | |
| | | | | | | |
Mortgagors’ escrow accounts | |
| 4,031 | |
| 8,106 | |
Advances from the Federal Home Loan Bank | |
| 54,857 | |
| 66,304 | |
Subordinated debt | |
| 5,155 | |
| 5,155 | |
Accrued expenses and other liabilities | |
| 17,150 | |
| 11,156 | |
Total liabilities | |
| 997,388 | |
| 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 | |
| 45,895 | |
| 45,869 | |
Unearned common stock held by the employee stock ownership plan ("ESOP") | | | (3,982) | | | (4,146) | |
Retained earnings | |
| 75,725 | |
| 72,152 | |
Accumulated other comprehensive loss: | |
| | |
| | |
Net unrealized gain (loss) on available for sale securities, net of taxes | |
| 1,411 | |
| (195) | |
Defined benefit pension plan, net of taxes | |
| (3,970) | |
| (3,909) | |
Total accumulated other comprehensive loss | |
| (2,559) | |
| (4,104) | |
Total stockholders’ equity | |
| 115,190 | |
| 109,882 | |
Total liabilities and stockholders’ equity | | $ | 1,112,578 | | $ | 973,946 | |
See accompanying notes to consolidated financial statements
2
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except share and per share data)
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | | ||||
Interest and Dividend Income | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 10,386 | | $ | 10,160 | | $ | 31,001 | | $ | 28,276 | |
Interest and dividends on securities | |
| 476 | |
| 655 | |
| 1,790 | |
| 1,976 | |
Other income | |
| 12 | |
| 10 | |
| 36 | |
| 51 | |
Total interest and dividend income | |
| 10,874 | |
| 10,825 | |
| 32,827 | |
| 30,303 | |
Interest Expense | |
|
| |
|
| |
|
| |
|
| |
Interest expense on deposits | |
| 1,553 | |
| 1,957 | |
| 5,429 | |
| 4,980 | |
Interest expense on borrowings | |
| 293 | |
| 404 | |
| 1,072 | |
| 1,368 | |
Total interest expense | |
| 1,846 | |
| 2,361 | |
| 6,501 | |
| 6,348 | |
Net interest income | |
| 9,028 | |
| 8,464 | |
| 26,326 | |
| 23,955 | |
Provision for loan losses | |
| 2,250 | |
| 450 | |
| 5,705 | |
| 2,010 | |
Net interest income after provision for loan losses | |
| 6,778 | |
| 8,014 | |
| 20,621 | |
| 21,945 | |
Noninterest Income | |
|
| |
|
| |
|
| |
|
| |
Service charges on deposit accounts | |
| 558 | |
| 729 | |
| 1,705 | |
| 2,141 | |
Net realized loss on sales and calls of securities | |
| — | |
| — | |
| (29) | |
| (40) | |
Net gain on sales of loans | |
| 976 | |
| 289 | |
| 2,382 | |
| 706 | |
Increase in cash surrender value of life insurance | |
| 97 | |
| 100 | |
| 290 | |
| 300 | |
Net gain from sale of other real estate owned | |
| 42 | |
| — | |
| 42 | |
| — | |
Other real estate owned income | |
| — | |
| 8 | |
| — | |
| 19 | |
Gain on disposal of premises and equipment | |
| 13 | |
| — | |
| 13 | |
| — | |
Investment advisory income | |
| 380 | |
| 225 | |
| 942 | |
| 767 | |
Other | |
| 30 | |
| 108 | |
| 61 | |
| 263 | |
Total noninterest income | |
| 2,096 | |
| 1,459 | |
| 5,406 | |
| 4,156 | |
Noninterest Expense | |
|
| |
|
| |
|
| |
|
| |
Salaries and employee benefits | |
| 4,158 | |
| 3,876 | |
| 12,305 | |
| 11,706 | |
Occupancy | |
| 885 | |
| 838 | |
| 2,613 | |
| 2,631 | |
Data processing | |
| 325 | |
| 353 | |
| 1,040 | |
| 1,003 | |
Professional fees | |
| 380 | |
| 361 | |
| 1,055 | |
| 987 | |
Marketing | |
| 95 | |
| 166 | |
| 320 | |
| 468 | |
FDIC deposit insurance and other insurance | |
| 248 | |
| 29 | |
| 613 | |
| 317 | |
Other real estate owned expense | |
| 54 | |
| 73 | |
| 80 | |
| 111 | |
Amortization of intangible assets | |
| 11 | |
| 10 | |
| 32 | |
| 32 | |
Other | |
| 1,276 | |
| 1,126 | |
| 3,438 | |
| 3,543 | |
Total noninterest expense | |
| 7,432 | |
| 6,832 | |
| 21,496 | |
| 20,798 | |
Income before income taxes | |
| 1,442 | |
| 2,641 | |
| 4,531 | |
| 5,303 | |
Provision for income taxes | |
| 292 | |
| 550 | |
| 958 | |
| 1,080 | |
Net income | | $ | 1,150 | | $ | 2,091 | | $ | 3,573 | | $ | 4,223 | |
| | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | |
Basic | | $ | 0.10 | | $ | 0.20 | | $ | 0.33 | | $ | 0.39 | |
Diluted | | $ | 0.10 | | $ | 0.20 | | $ | 0.33 | | $ | 0.39 | |
| | | | | | | | | | | | | |
Weighted average shares outstanding, basic | | | 10,732,321 | | | 10,710,500 | | | 10,726,867 | | | 10,705,046 | |
Weighted average shares outstanding, diluted | | | 10,732,321 | | | 10,710,500 | | | 10,726,867 | | | 10,705,046 | |
See accompanying notes to consolidated financial statements
3
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in thousands, except share and per share data)
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | | ||||
Net Income | | $ | 1,150 | | $ | 2,091 | | $ | 3,573 | | $ | 4,223 | |
Other Comprehensive Income: | |
| | |
|
| |
| | |
| | |
Unrealized holding (losses) gains arising during the period | |
| (545) | |
| 474 | |
| 2,006 | |
| 3,680 | |
Reclassification adjustment for losses included in net realized loss on sales and calls of securities on the consolidated statements of income | |
| — | |
| — | |
| 29 | |
| 40 | |
Net unrealized (losses) gains on available for sale securities | |
| (545) | |
| 474 | |
| 2,035 | |
| 3,720 | |
Tax effect (a) | |
| 114 | |
| (99) | |
| (429) | |
| (781) | |
Unrealized (losses) gains on available for sale securities, net of tax | |
| (431) | |
| 375 | |
| 1,606 | |
| 2,939 | |
Defined benefit pension plan: | |
|
| |
|
| |
|
| |
|
| |
Actuarial gains (losses) arising during the period | |
| 806 | |
| (50) | |
| (291) | |
| (111) | |
Reclassification adjustment for amortization of net actuarial losses (b) | |
| 71 | |
| 110 | |
| 214 | |
| 289 | |
Total | |
| 877 | |
| 60 | |
| (77) | |
| 178 | |
Tax effect (c) | |
| (184) | |
| (13) | |
| 16 | |
| (38) | |
Defined benefit pension plan gains (losses), net of tax | |
| 693 | |
| 47 | |
| (61) | |
| 140 | |
Other comprehensive income | |
| 262 | |
| 422 | |
| 1,545 | |
| 3,079 | |
Total Comprehensive Income | | $ | 1,412 | | $ | 2,513 | | $ | 5,118 | | $ | 7,302 | |
(a) | Includes $0 and $6 for the three and nine months ended September 30, 2020, respectively, and $0 and $8 for the three and nine months ended September 30, 2019, respectively, 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 $45 for the three and nine months ended September 30, 2020, respectively, and $23 and $61 for the three and nine months ended September 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
4
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 | |
| | | | | | | | | | | | | | | | | | | |
Net income | |
| — | |
| — | |
| — | |
| 2,091 | |
| — | |
| 2,091 | |
Other comprehensive income | | | — | |
| — | |
| — | |
| — | |
| 422 | |
| 422 | |
ESOP shares committed to be allocated | |
| — | |
| 4 | |
| 55 | |
| — | |
| — | |
| 59 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| | |
Balance at September 30, 2019 | | $ | 111 | | $ | 45,865 | | $ | (4,200) | | $ | 70,412 | | $ | (3,933) | | $ | 108,255 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| | |
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 | |
| | | | | | | | | | | | | | | | | | | |
Net income | |
| — | |
| — | |
| — | |
| 1,150 | |
| — | |
| 1,150 | |
Other comprehensive income | |
| — | |
| — | |
| — | |
| — | |
| 262 | |
| 262 | |
ESOP shares committed to be allocated | | | — | | | (18) | | | 55 | | | — | | | — | | | 37 | |
Share-based compensation expense | |
| — | |
| 61 | |
| — | |
| — | |
| — | |
| 61 | |
| | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2020 | | $ | 111 | | $ | 45,895 | | $ | (3,982) | | $ | 75,725 | | $ | (2,559) | | $ | 115,190 | |
See accompanying notes to consolidated financial statements
5
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands, except share and per share data)
| | Nine Months Ended September 30, | | ||||
|
| 2020 |
| 2019 | | ||
Cash Flows from Operating Activities | | | | | | | |
Net income | | $ | 3,573 | | $ | 4,223 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |
|
| |
|
| |
Amortization and accretion of premiums and discounts on investments, net | |
| 542 | |
| 169 | |
Net realized loss on sales and calls of securities | |
| 29 | |
| 40 | |
Net realized gain on sale of other real estate owned | | | (42) | | | — | |
Provision for loan losses | |
| 5,705 | |
| 2,010 | |
Loans originated for sale | |
| (65,974) | |
| (30,455) | |
Proceeds from sale of loans | |
| 68,745 | |
| 30,985 | |
Net gain on sale of loans | |
| (2,382) | |
| (706) | |
Amortization of intangible assets | |
| 32 | |
| 32 | |
Depreciation and amortization | |
| 1,014 | |
| 969 | |
Gain from disposal of premises and equipment | |
| (13) | |
| — | |
Deferred income tax benefit | |
| (1,474) | |
| (224) | |
Increase in cash surrender value of insurance | |
| (290) | |
| (300) | |
Increase in accrued interest receivable | |
| (994) | |
| (270) | |
Expense of earned ESOP shares | |
| 129 | |
| — | |
Share-based compensation expense | | | 61 | | | — | |
(Increase) decrease in other assets | |
| (8,315) | |
| 1,213 | |
Increase in accrued expenses and other liabilities | |
| 5,914 | |
| 1,256 | |
Net cash provided by operating activities | |
| 6,260 | |
| 8,942 | |
Cash Flows from Investing Activities | |
|
| |
|
| |
Proceeds from sales and calls of securities | |
| 6,997 | |
| 5,554 | |
Proceeds from maturities and principal repayments of securities | |
| 28,142 | |
| 11,952 | |
Purchases of securities | |
| (25,210) | |
| (28,388) | |
Net sales (purchases) of FHLB Stock | |
| 460 | |
| (725) | |
Net increase in loans | |
| (104,977) | |
| (82,430) | |
Purchases of bank owned life insurance | |
| (41) | |
| (41) | |
Purchases of bank premises and equipment | |
| (1,548) | |
| (2,500) | |
Net increase of other real estate owned | |
| (31) | |
| — | |
Proceeds from sale of other real estate owned | |
| 2,221 | |
| 180 | |
Net cash used in investing activities | |
| (93,987) | |
| (96,398) | |
Cash Flows from Financing Activities | |
|
| |
|
| |
Net increase in demand deposits, NOW, money market and savings accounts | |
| 151,023 | |
| 31,429 | |
Net (decrease) increase in time deposits | |
| (8,171) | |
| 54,138 | |
Decrease in mortgagors' escrow accounts | |
| (4,075) | |
| (4,032) | |
Net decrease in short-term debt | |
| (2,223) | |
| (13,954) | |
Net (decrease) increase in long-term debt | |
| (9,224) | |
| 25,292 | |
Proceeds of stock subscriptions | |
| — | |
| 9,814 | |
Return of unfulfilled stock subscriptions | | | — | | | (41,082) | |
Loan to ESOP | | | — | | | (4,364) | |
Offering expenses | | | — | | | (1,898) | |
Return of capital to Rhinebeck Bancorp, MHC | | | — | | | (121) | |
Net cash provided by financing activities | |
| 127,330 | |
| 55,222 | |
Net increase (decrease) in cash and due from banks | |
| 39,603 | |
| (32,234) | |
Cash and Due from Banks | |
|
| |
|
| |
Beginning balance | |
| 11,978 | |
| 50,590 | |
Ending balance | | $ | 51,581 | | $ | 18,356 | |
Supplemental Disclosures of Cash Flow Information | |
|
| |
|
| |
Cash paid for: | |
|
| |
|
| |
Interest | | $ | 6,650 | | $ | 6,243 | |
Income taxes | | $ | 2,897 | | $ | 1,040 | |
Noncash Investing and Financing Activities | |
|
| |
|
| |
Transfer of loans to other real estate owned | | $ | 1,858 | | $ | — | |
See accompanying notes to consolidated financial statements
6
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 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 nine month periods ended September 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 September 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, with the exception of the adoption of the equity incentive plan by the Company. See Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies.”
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
7
Rhinebeck Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements (Unaudited)
(Dollars in thousands, except share and per share data)
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 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 economic effects of the COVID-19 outbreak has and will likely continue to 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.
8
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.
The amortized cost, gross unrealized gains and losses and fair values of available for sale securities are as follows:
| | | | | | | | | | | | |
| | September 30, 2020 | ||||||||||
| | | | Gross | | Gross | | | ||||
| | | | Unrealized | | Unrealized | | | ||||
|
| Amortized Cost |
| Gains |
| Losses |
| Fair Value | ||||
U.S. government agency mortgage-backed securities–residential | | $ | 92,779 | | $ | 1,811 | | $ | (183) | | $ | 94,407 |
U.S. government agency securities |
| | 7,016 |
| | 168 |
| | (3) |
| | 7,181 |
Municipal securities(1) |
| | 1,188 |
| | 23 |
| | (5) |
| | 1,206 |
Corporate bonds |
| | 3,000 |
| | 15 |
| | (17) |
| | 2,998 |
Other |
| | 597 |
| | — |
| | (22) |
| | 575 |
Total | | $ | 104,580 | | $ | 2,017 | | $ | (230) | | $ | 106,367 |
| | | | | | | | | | | | |
|
| 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. |
9
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:
| | | | | | | | | | | | | | | | | | |
| | September 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 | | $ | 23,935 | | $ | (171) | | $ | 567 | | $ | (12) | | $ | 24,502 | | $ | (183) |
U.S. government agency securities | | | 2,000 | | | (3) | | | — | | | — | | | 2,000 | | | (3) |
Municipal Securities | | | 495 | | | (5) | | | — | | | — | | | 495 | | | (5) |
Corporate Bonds | | | 1,500 | | | (17) | | | — | | | — | | | 1,500 | | | (17) |
Other | | | 537 | | | (22) | | | — | | | — | | | 537 | | | (22) |
Total | | $ | 28,467 | | $ | (218) | | $ | 567 | | $ | (12) | | $ | 29,034 | | $ | (230) |
| | | | | | | | | | | | | | | | | | |
|
| 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 September 30, 2020, the Company had 32 individual available-for-sale securities in an unrealized loss position with unrealized losses totaling $230 with an aggregate depreciation of 0.80% 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 September 30, 2020.
The amortized cost and fair value of available for sale debt securities at September 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.
10
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:
| | | | | | | | | | | | |
| | September 30, 2020 | | December 31, 2019 | ||||||||
|
| Amortized Cost |
| Fair Value |
| Amortized Cost |
| Fair Value | ||||
Maturity: | | | | | | | | | | | | |
Within 1 year | | $ | — | | $ | — | | $ | 175 | | $ | 175 |
After 1 but within 5 years |
| | 2,000 |
| | 1,997 |
| | 7,027 |
| | 7,001 |
After 5 but within 10 years |
| | 8,299 |
| | 8,487 |
| | 7,806 |
| | 7,899 |
After 10 years |
| | 905 |
| | 901 |
| | 675 |
| | 670 |
Total Maturities |
| | 11,204 |
| | 11,385 |
| | 15,683 |
| | 15,745 |
| | | | | | | | | | | | |
Mortgage-backed securities |
| | 92,779 |
| | 94,407 |
| | 98,842 |
| | 98,478 |
Other |
| | 597 |
| | 575 |
| | 555 |
| | 609 |
Total |