Company Quick10K Filing
Rhinebeck Bancorp
Price10.50 EPS0
Shares11 P/E28
MCap117 P/FCF16
Net Debt-18 EBIT12
TEV99 TEV/EBIT8
TTM 2019-09-30, in MM, except price, ratios
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8-K 2018-11-09

RBKB 10Q Quarterly Report

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

Rhinebeck Bancorp Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
95076057038019002016201720182020
Assets, Equity
2.11.71.30.80.40.02016201720182020
Rev, G Profit, Net Income
35193-13-29-452016201720182020
Ops, Inv, Fin

10-Q 1 rbkb-20200930x10q.htm 10-Q

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


TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

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

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2020 and 2019

4

Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019

5

Consolidated Statements of Cash Flows for the Nine Months Ended September 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

37

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

50

Item 4.

Controls and Procedures

50

PART II. OTHER INFORMATION

50

Item 1.

Legal Proceedings

50

Item 1A.

Risk Factors

51

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3.

Defaults Upon Senior Securities

51

Item 4.

Mine Safety Disclosures

51

Item 5.

Other Information

51

Item 6.

Exhibits

51

SIGNATURES

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

ITEM 1.

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


Table of Contents

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

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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.

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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:

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.

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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:

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.

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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:

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