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, 2019

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, 2019, 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, 2019 and December 31, 2018

2

 

 

 

 

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018

3

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018

4

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2019 and 2018

5

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018

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

44

 

 

 

Item 4. 

Controls and Procedures

44

 

 

 

PART II. OTHER INFORMATION 

45

 

 

 

Item 1. 

Legal Proceedings

45

 

 

 

Item 1A. 

Risk Factors

45

 

 

 

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

45

 

 

 

Item 3. 

Defaults Upon Senior Securities

45

 

 

 

Item 4. 

Mine Safety Disclosures

45

 

 

 

Item 5. 

Other Information

45

 

 

 

Item 6. 

Exhibits

46

 

 

 

 

SIGNATURES

47

 

 

 

 

 

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, MHC and Rhinebeck Bank at and for the year ended December 31, 2018 contained in the Company’s Annual Report on Form 10‑K, as filed with the Securities and Exchange Commission on March 29, 2019.

1

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)

 

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

 

    

2019

    

2018

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

 

$

18,356

 

$

50,590

 

Available for sale securities (at fair value)

 

 

115,705

 

 

101,312

 

Loans receivable (net of allowance for loan losses of $7,903 and $6,646, respectively)

 

 

758,999

 

 

678,402

 

Federal Home Loan Bank stock

 

 

2,608

 

 

1,883

 

Accrued interest receivable

 

 

2,793

 

 

2,523

 

Cash surrender value of life insurance

 

 

18,359

 

 

18,018

 

Deferred tax assets (net of valuation allowance of $1,210 and $1,085, respectively)

 

 

2,340

 

 

2,934

 

Premises and equipment, net

 

 

18,571

 

 

17,040

 

Other real estate owned

 

 

1,505

 

 

1,685

 

Goodwill

 

 

1,410

 

 

1,410

 

Intangible assets, net

 

 

252

 

 

284

 

Other assets

 

 

5,129

 

 

6,342

 

Total assets

 

$

946,027

 

$

882,423

 

Liabilities and Stockholders’ Equity

 

 

  

 

 

  

 

Liabilities

 

 

  

 

 

  

 

Deposits

 

 

  

 

 

  

 

Noninterest bearing

 

$

179,924

 

$

171,829

 

Interest bearing

 

 

590,061

 

 

512,589

 

Total deposits

 

 

769,985

 

 

684,418

 

 

 

 

 

 

 

 

 

Mortgagors’ escrow accounts

 

 

3,693

 

 

7,725

 

Advances from the Federal Home Loan Bank

 

 

47,936

 

 

31,598

 

Subordinated debt

 

 

5,155

 

 

5,155

 

Other borrowings

 

 

 —

 

 

5,000

 

Subscription offering proceeds

 

 

 —

 

 

79,142

 

Accrued expenses and other liabilities

 

 

11,003

 

 

10,108

 

Total liabilities

 

 

837,772

 

 

823,146

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

  

 

 

  

 

Preferred stock (par value $0.01 per share; 5,000,000 authorized, 0 issued)

 

 

 —

 

 

 —

 

Common stock (par value $0.01 per share; 25,000,000 authorized, 11,133,290 issued and outstanding)

 

 

111

 

 

 —

 

Additional paid-in capital

 

 

45,865

 

 

100

 

Unallocated common stock held by the employee stock ownership plan

 

 

(4,200)

 

 

 —

 

Retained earnings

 

 

70,412

 

 

66,189

 

Accumulated other comprehensive loss:

 

 

 

 

 

 

 

Net unrealized gain (loss) on available for sale securities, net of taxes

 

 

363

 

 

(2,576)

 

Defined benefit pension plan, net of taxes

 

 

(4,296)

 

 

(4,436)

 

Total accumulated other comprehensive loss

 

 

(3,933)

 

 

(7,012)

 

Total stockholders’ equity

 

 

108,255

 

 

59,277

 

Total liabilities and stockholders’ equity

 

$

946,027

 

$

882,423

 

 

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, 

 

 

    

2019

    

2018

    

2019

    

2018

 

Interest and Dividend Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

10,160

 

$

8,570

 

$

28,276

 

$

22,713

 

Interest and dividends on securities

 

 

655

 

 

578

 

 

1,976

 

 

1,762

 

Other income

 

 

10

 

 

 5

 

 

51

 

 

14

 

Total interest and dividend income

 

 

10,825

 

 

9,153

 

 

30,303

 

 

24,489

 

Interest Expense

 

 

  

 

 

  

 

 

  

 

 

  

 

Interest expense on deposits

 

 

1,957

 

 

1,112

 

 

4,980

 

 

2,927

 

Interest expense on borrowings

 

 

404

 

 

311

 

 

1,368

 

 

673

 

Total interest expense

 

 

2,361

 

 

1,423

 

 

6,348

 

 

3,600

 

Net interest income

 

 

8,464

 

 

7,730

 

 

23,955

 

 

20,889

 

Provision for loan losses

 

 

450

 

 

525

 

 

2,010

 

 

1,575

 

Net interest income after provision for loan losses

 

 

8,014

 

 

7,205

 

 

21,945

 

 

19,314

 

Noninterest Income

 

 

  

 

 

  

 

 

  

 

 

  

 

Service charges on deposit accounts

 

 

729

 

 

785

 

 

2,141

 

 

2,030

 

Net realized loss on sales and calls of securities

 

 

 —

 

 

(21)

 

 

(40)

 

 

(22)

 

Net gain on sales of loans

 

 

159

 

 

167

 

 

367

 

 

435

 

Increase in cash surrender value of life insurance

 

 

100

 

 

101

 

 

300

 

 

300

 

Write-downs of other real estate owned

 

 

 —

 

 

 —

 

 

 —

 

 

(387)

 

Other real estate owned income

 

 

 8

 

 

11

 

 

19

 

 

32

 

Investment advisory income

 

 

225

 

 

225

 

 

767

 

 

557

 

Other

 

 

238

 

 

230

 

 

602

 

 

685

 

Total noninterest income

 

 

1,459

 

 

1,498

 

 

4,156

 

 

3,630

 

Noninterest Expense

 

 

  

 

 

  

 

 

  

 

 

  

 

Salaries and employee benefits

 

 

3,944

 

 

3,601

 

 

11,915

 

 

10,520

 

Occupancy

 

 

838

 

 

818

 

 

2,631

 

 

2,572

 

Data processing

 

 

353

 

 

283

 

 

1,003

 

 

851

 

Professional fees

 

 

361

 

 

217

 

 

987

 

 

635

 

Marketing

 

 

166

 

 

148

 

 

468

 

 

532

 

FDIC deposit insurance and other insurance

 

 

29

 

 

229

 

 

317

 

 

608

 

Other real estate owned expense

 

 

73

 

 

101

 

 

111

 

 

184

 

Amortization of intangible assets

 

 

10

 

 

11

 

 

32

 

 

32

 

Impairment loss on goodwill

 

 

 —

 

 

 —

 

 

 —

 

 

95

 

Other

 

 

1,058

 

 

1,065

 

 

3,334

 

 

3,211

 

Total noninterest expense

 

 

6,832

 

 

6,473

 

 

20,798

 

 

19,240

 

Income before income taxes

 

 

2,641

 

 

2,230

 

 

5,303

 

 

3,704

 

Provision for income taxes

 

 

550

 

 

266

 

 

1,080

 

 

545

 

Net income

 

$

2,091

 

$

1,964

 

$

4,223

 

$

3,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.20

 

$

 —

 

$

0.39

 

$

 —

 

Diluted

 

$

0.20

 

$

 —

 

$

0.39

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

 

10,710,500

 

 

 —

 

 

10,705,046

 

 

 —

 

Weighted average shares outstanding, diluted

 

 

10,710,500

 

 

 —

 

 

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, 

 

 

    

2019

    

2018

    

2019

    

2018

 

Net Income

 

$

2,091

 

$

1,964

 

$

4,223

 

$

3,159

 

Other Comprehensive Income:

 

 

 

 

 

  

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

474

 

 

(670)

 

 

3,680

 

 

(2,455)

 

Reclassification adjustment for losses included in net realized loss on sales and calls of securities on the consolidated statements of income

 

 

 —

 

 

21

 

 

40

 

 

22

 

Net unrealized gains (losses) on available for sale securities

 

 

474

 

 

(649)

 

 

3,720

 

 

(2,433)

 

Tax effect (a)

 

 

(99)

 

 

137

 

 

(781)

 

 

511

 

Unrealized gains (losses) on available for sale securities, net of tax

 

 

375

 

 

(512)

 

 

2,939

 

 

(1,922)

 

Defined benefit pension plan:

 

 

  

 

 

  

 

 

  

 

 

  

 

Actuarial (loss) gain arising during the period

 

 

(50)

 

 

 —

 

 

(111)

 

 

823

 

Reclassification adjustment for amortization of net actuarial loss (b)

 

 

110

 

 

 —

 

 

289

 

 

187

 

Total

 

 

60

 

 

 —

 

 

178

 

 

1,010

 

Tax effect (c)

 

 

(13)

 

 

 —

 

 

(38)

 

 

(211)

 

Defined benefit pension plan gain, net of tax

 

 

47

 

 

 —

 

 

140

 

 

799

 

Other comprehensive income (loss)

 

 

422

 

 

(512)

 

 

3,079

 

 

(1,123)

 

Total Comprehensive Income

 

$

2,513

 

$

1,452

 

$

7,302

 

$

2,036

 


(a) -  Includes $0 and $8 for the three and nine months ended September 30, 2019 and $4 and $5 for the three and nine months ended September 30, 2018 for tax effect of realized losses which are included in the provision for income taxes on the consolidated statements of income.

(b) - Included in salaries and benefits on the consolidated statements of income.

(c) - Includes $19 and $56 for the three and nine months ended September 30, 2019, respectively and $0 and $39 for the three and nine months ended September 30, 2018, 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated

 

 

 

Accumulated

 

 

 

 

 

 

 

Additional

 

Common

 

 

 

Other

 

 

 

 

 

Common

 

Paid-in

 

Stock Held

 

Retained

 

Comprehensive

 

 

 

 

    

Stock

    

Capital

 

by the ESOP

    

Earnings

    

Loss

    

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 

$

 —

 

$

100

 

$

 —

 

$

61,832

 

$

(6,955)

 

$

54,977

 

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

616

 

 

 —

 

 

616

 

Other comprehensive loss

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,074)

 

 

(1,074)

 

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

Balance at March 31, 2018

 

$

 —

 

$

100

 

$

 —

 

$

62,448

 

$

(8,029)

 

$

54,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

579

 

 

 —

 

 

579

 

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

463

 

 

463

 

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

Balance at June 30, 2018

 

$

 —

 

$

100

 

$

 —

 

$

63,027

 

$

(7,566)

 

$

55,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

1,964

 

 

 —

 

 

1,964

 

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(512)

 

 

(512)

 

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

Balance at September 30, 2018

 

$

 —

 

$

100

 

$

 —

 

$

64,991

 

$

(8,078)

 

$

57,013

 

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

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

 

Unallocated 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

 

 

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, 

 

 

    

2019

    

2018

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net income

 

$

4,223

 

$

3,159

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

  

 

 

 

 

Amortization and accretion of premiums and discounts on investments, net

 

 

169

 

 

265

 

Net realized loss on sales and calls of securities

 

 

40

 

 

22

 

Provision for loan losses

 

 

2,010

 

 

1,575

 

Loans originated for sale

 

 

(32,392)

 

 

(26,937)

 

Proceeds from sale of loans

 

 

30,807

 

 

29,146

 

Net gain on sale of loans

 

 

(367)

 

 

(435)

 

Amortization of intangible assets

 

 

32

 

 

32

 

Depreciation and amortization

 

 

969

 

 

866

 

Impairment loss on goodwill

 

 

 —

 

 

95

 

Write-down of other real estate owned

 

 

 —

 

 

387

 

Deferred income tax expense

 

 

(224)

 

 

(12)

 

Increase in cash surrender value of insurance

 

 

(300)

 

 

(300)

 

Increase in accrued interest receivable

 

 

(270)

 

 

(269)

 

Increase (decrease) in other assets

 

 

1,213

 

 

(788)

 

Increase in accrued expenses and other liabilities

 

 

1,258

 

 

 7

 

Net cash provided by operating activities

 

 

7,168

 

 

6,813

 

Cash Flows from Investing Activities

 

 

  

 

 

  

 

Proceeds from sales and calls of securities

 

 

5,554

 

 

2,113

 

Proceeds from maturities and principal repayments of securities

 

 

11,952

 

 

11,881

 

Purchases of securities

 

 

(28,388)

 

 

(3,885)

 

Net purchases of FHLB Stock

 

 

(725)

 

 

(1,766)

 

Net increase in loans

 

 

(80,656)

 

 

(89,224)

 

Purchases of bank owned life insurance

 

 

(41)

 

 

(41)

 

Purchases of bank premises and equipment

 

 

(2,500)

 

 

(434)

 

Proceeds from sale of other real estate owned

 

 

180

 

 

108

 

Net cash used in investing activities

 

 

(94,624)

 

 

(81,248)

 

Cash Flows from Financing Activities

 

 

  

 

 

  

 

Net increase in demand deposits, NOW, money market and savings accounts

 

 

31,429

 

 

30,911

 

Net increase in time deposits

 

 

54,138

 

 

10,702

 

Decrease in mortgagors' escrow accounts

 

 

(4,032)

 

 

(3,763)

 

Net (decrease) increase in short-term debt

 

 

(13,954)

 

 

20,537

 

Net increase in long-term debt

 

 

25,292

 

 

18,184

 

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

 

 

55,222

 

 

76,571

 

Net (decrease) increase in cash and due from banks

 

 

(32,234)

 

 

2,136

 

Cash and Due from Banks

 

 

  

 

 

  

 

Beginning balance

 

 

50,590

 

 

10,460

 

Ending balance

 

$

18,356

 

$

12,596

 

Supplemental Disclosures of Cash Flow Information

 

 

  

 

 

  

 

Cash paid for:

 

 

  

 

 

  

 

Interest

 

$

6,424

 

$

3,483

 

Income taxes

 

$

1,040

 

$

368

 

 

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 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 nine month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 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, 2018, filed with the Securities and Exchange Commission. As of September 30, 2019, the significant 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, 2018.

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. As a result of the reorganization, the consolidation refers to the Company and the Bank for the periods after January 16, 2019 and Rhinebeck Bancorp, MHC, a New York chartered mutual holding company, and the Bank for the periods prior to January 16, 2019. 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.

7

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

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

Impact of Recent Accounting Pronouncements

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014‑09, “Revenue from Contracts with Customers (Topic 606)”. ASU No. 2014‑09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The Company used the modified retrospective method for transition with the cumulative effect recognized as of the date of initial application with no restatement of prior periods. The adoption did not have a material effect on the Company’s financial statements as the recognition of interest income has been scoped out of the guidance and noninterest income recognition is similar to current revenue recognition practices. See Note 14 for additional information related to the adoption of ASU No. 2014‑09.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016‑02 “Leases (Topic 842).” This standard requires entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018 for public companies, but the Company will have until the first quarter of 2020 to adopt due to its emerging growth company status. The guidance is required to be applied by the modified retrospective transition approach. Early adoption is permitted. We are currently assessing the impact of the adoption of this authoritative guidance on our consolidated financial statements and collecting the data necessary for that assessment and adoption.

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. The Company is currently assessing the effect of ASU No. 2016‑13 and has engaged with a software vendor to assist in its efforts.

Effective January 1, 2019, the Company adopted ASU No. 2018-07, “Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”. This update expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based payment awards will be measured at the grant-date fair value of the equity instruments that an entity is obligated to issue when the service has been rendered, subject to the probability of satisfying performance conditions when applicable. The Company has not and does not expect to engage in this type of compensation practice, and therefore this update did not and likely will not, have an effect on the Company.

Effective January 1, 2019, the Company adopted ASU 2017-04 “Intangibles – Goodwill and Other (Topic 350).” ASU 2017-04 simplifies the test for goodwill impairment, which eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The adoption of ASU 2017-04 did not have a material impact on the Company’s consolidated financial statements.

8

Table of Contents

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