Rhinebeck Bancorp, Inc. — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023, compared with fiscal 2022. This is an annual filing, not a standalone fourth-quarter report; the filing text does not provide a clear set of Q4-only results. Rhinebeck Bancorp is the holding company for Rhinebeck Bank, a community bank serving New York’s Hudson Valley and Albany-area markets.
Financial performance and condition
| Metric | 2023 | 2022 |
|---|---|---|
| Total assets at year-end | $1.313 billion | $1.336 billion |
| Deposits at year-end | $1.031 billion | $1.130 billion |
| Net loans at year-end | $1.009 billion | $994.4 million |
| Net interest income | $38.0 million | $41.8 million |
| Net income | $4.4 million | $7.0 million |
| Diluted earnings per share | $0.40 | $0.64 |
| Net cash from operating activities | $7.0 million | $14.8 million |
- Interest and dividend income increased 24.8% to $60.7 million, but interest expense rose 235.9% to $22.7 million. The resulting net interest income declined 9.3%.
- Net interest margin fell to 3.06% from 3.45%; interest rate spread declined to 2.44% from 3.22%. Return on average assets was 0.33% and return on average equity was 4.03%, versus 0.54% and 6.06% in 2022.
- Non-interest income was $5.8 million, down 2.0%. Non-interest expense fell 2.7% to $36.4 million, but the efficiency ratio worsened to 83.28% from 78.40%.
- Cash and cash equivalents were $22.1 million at year-end, down from $31.4 million. Available-for-sale securities were $192.0 million, down from $223.7 million. The filing reports $679.4 million in total available funding sources, including cash, unencumbered securities and borrowing lines.
- FHLB advances rose to $128.1 million from $57.7 million; subordinated debt was $5.2 million. Stockholders’ equity was $113.7 million, or 8.19% of assets on the reported performance-ratio basis. The Bank was classified as well capitalized: its total risk-based capital ratio was 12.70% and Tier 1 leverage ratio was 10.10%.
- Non-performing loans were $4.2 million, or 0.41% of loans, compared with $4.4 million and 0.45% in 2022. The allowance for credit losses was $8.1 million, 0.81% of loans and 194.31% of non-performing loans. Net charge-offs increased to $2.1 million from $1.0 million.
- Year-end available-for-sale securities had $33.0 million of gross unrealized losses. Accumulated other comprehensive loss attributable to securities was $26.1 million, net of tax. Management attributed the declines principally to interest rates and market conditions; no allowance for credit losses on these securities was recorded.
Material changes and unusual items
- Deposits declined $99.4 million, or 8.8%, amid higher-rate competition, customer movement into certificates of deposit and withdrawals following widely publicized bank failures. Core deposits fell to 69.1% of deposits from 80.9%; uninsured deposits were estimated at $295.6 million, down from $394.6 million.
- The company used more FHLB funding as deposits fell, contributing to higher funding costs. Average cost of interest-bearing liabilities increased to 2.44% from 0.79%.
- Loan balances grew 1.5% overall: commercial real estate loans rose $57.5 million and residential real estate loans rose $23.5 million, while indirect auto loans declined $63.0 million. Indirect auto loans remained a significant concentration at $394.2 million, or 39.1% of the loan portfolio.
- Net income fell 37.2%, principally reflecting margin compression and higher credit-loss provision, partly offset by lower operating expenses. Mortgage-loan sale gains decreased as originations and sales declined and the company retained more residential mortgages.
- CECL was adopted January 1, 2023. Adoption increased the loan allowance by $580,000 and the unfunded-commitment allowance by $221,000, with a $633,000 after-tax reduction to retained earnings. The company says the new methodology and prior-period figures are not fully comparable.
- Operating cash flow decreased to $7.0 million. Investing activities provided $14.7 million, versus $123.6 million used in 2022; financing activities used $31.0 million, versus $68.1 million provided in 2022.
Outlook, risks and contingencies
- Management expects the balance sheet to decrease in 2024 as the company rebalances its portfolio, stabilize in 2025, and then return to moderate growth. It plans to limit indirect auto portfolio growth, emphasize commercial and residential lending, build core deposits and continue expense control. No quantitative earnings or margin guidance is provided.
- Management cited rising delinquencies and expected increases in indirect-auto losses, alongside inflation and higher rates, as factors reflected in credit-loss qualitative adjustments. Key exposures include auto lending, commercial and non-owner-occupied real estate, local economic conditions, deposit competition, liquidity and interest-rate sensitivity.
- The company’s interest-rate model estimated a 28.3% decrease in economic value of equity under an immediate 400-basis-point rate increase, and a 26.7% decrease under a 400-basis-point decrease. Management cautions that model assumptions limit the precision of these estimates.
- The Bank’s Beacon branch sale for $2.9 million closed February 23, 2024; a $375,000 impairment was recorded in 2023. Management reported no pending legal proceeding expected to materially affect the company and no cybersecurity incident with a material effect or reasonably likely material effect.
- The company does not expect to pay cash dividends in the foreseeable future. The CFO announced retirement effective May 31, 2024. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation because the company is an emerging growth company.
Important facts for investors to verify
- Deposit retention and pricing, upcoming certificate maturities, uninsured-deposit trends, and the company’s continued reliance on FHLB advances.
- Whether indirect-auto delinquencies, charge-offs and loss forecasts worsen, and whether the allowance remains adequate under CECL assumptions.
- Commercial real estate credit quality, especially non-owner-occupied properties, watch-list exposures and construction commitments.
- Net interest margin and deposit repricing trends, plus the market-value impact of unrealized securities losses on equity and liquidity.
- Progress against the stated 2024 balance-sheet rebalancing and 2025 stabilization outlook, and the effect of the branch sale and CFO transition.