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What changed in Rhinebeck Bancorp, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Rhinebeck Bancorp, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+402 added−423 removedSource: 10-K (2025-03-25) vs 10-K (2024-03-26)

Top changes in Rhinebeck Bancorp, Inc.'s 2024 10-K

402 paragraphs added · 423 removed · 336 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

171 edited+16 added−42 removed179 unchanged
Biggest changeThe uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements. ​ As of December 31, 2023, the aggregate amount of certificates of deposits in denominations greater than $250,000 was $100.1 million.
Biggest changeThe uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements, which includes affiliate deposits and collateralized deposits. ​ The following table summarizes total uninsured deposits based on the same methodologies and assumptions used for the Bank’s regulatory reporting: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 ​ ​ (Dollars in thousands) Uninsured deposits, per regulatory requirements ​ $ 278,329 ​ $ 295,574 Less affiliate deposits ​ (8,728) ​ (9,448) Collateralized deposits ​ — ​ — Uninsured deposits, after exclusions ​ $ 269,601 ​ $ 286,126 ​ ​ ​ ​ ​ ​ ​ Available liquidity (1) ​ $ 613,696 ​ $ 679,393 Uninsured deposits coverage ​ ​ 227.6% ​ ​ 237.4% Uninsured deposits after exclusions as a percent of total deposits ​ ​ 26.4% ​ ​ 27.8% (1) Includes cash and cash equivalents, unencumbered securities, lines of credit and remaining borrowing capacity from the FHLB and FRB. 18 Table of Contents As of December 31, 2024, the aggregate amount of certificates of deposits in denominations greater than $250,000 was $95.6 million.
The allowance for credit losses is an estimate of current expected credit losses based on available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
Allowance for Credit Losses The allowance for credit losses is an estimate of current expected credit losses based on available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
Regulatory relief legislation enacted in May 2018 required the federal banking agencies, including the FDIC, to establish for institutions with assets of less than $10 billion of assets an elective “community bank leverage ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) of between 8 to 10%.
Regulatory relief legislation enacted in May 2018 required the federal banking agencies, including the FDIC, to establish for institutions with assets of less than $10 billion an elective “community bank leverage ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) of between 8 to 10%.
An institution is considered “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater.
An institution is considered “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 capital ratio of 6.5% or greater.
The CRA requires the FDIC, in connection with its examination of each state non-member bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, including applications to establish branches and acquire other financial institutions.
The CRA requires the FDIC, in connection with its examination of each state non-member bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by the institution, including applications to establish branches and acquire other financial institutions.
A bank holding company is generally required to give the Federal Reserve Board prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth.
A bank holding company is generally required to give the Federal Reserve Board prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the holding company’s consolidated net worth.
If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional restrictions, including an order by the FDIC to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, cease receipt of deposits from correspondent banks or dismiss directors or officers, and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company.
If an “undercapitalized” bank fails to submit an acceptable capital restoration plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional restrictions, including an order by the FDIC to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, cease receipt of deposits from correspondent banks or dismiss directors or officers, and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company.
There are no limits on security purchases or sales executed for cash management or the liquidity needs of the Bank. Transactions require the approval of both the President and CEO and the Chief Financial Officer and must be reported to the Investment Committee, which reports them to the Board.
There are no limits on security purchases or sales executed for cash management or the liquidity needs of the Bank. Transactions require the approval of both the President and CEO and the Chief Financial Officer and must be reported to the Investment Committee, which reports them to the Board of Directors.
In addition, a nonmember bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a “financial subsidiary” if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes. Prompt Corrective Regulatory Action.
In addition, a state nonmember bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a “financial subsidiary” if the bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes. Prompt Corrective Regulatory Action.
Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation on real property, it is relatively difficult to accurately evaluate the total funds required to complete a project and the related loan-to-value ratio.
Because of the uncertainties inherent in estimating construction timing and costs, as well as the market value of the completed project and the effects of governmental regulation on real property, it is relatively difficult to accurately evaluate the total funds required to complete a project and the related loan-to-value ratio.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order or condition imposed by the FDIC.
Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan.
Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the institution’s holding company must guarantee the performance of that plan.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater.
An institution is considered “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 capital ratio of 4.5% or greater.
An institution is “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
An institution is considered “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
An institution is considered “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 capital ratio of less than 4.5%.
An institution is “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%.
An institution is considered “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 capital ratio of less than 3.0%.
We will consider originating one- to four-family residential real estate loans secured by properties located outside our normal lending area on a case-by-case basis, preferably to preexisting customers with a relationship of one year or longer, and provided the property is located in New York. We offer fixed-rate and adjustable-rate residential mortgage loans with maturities up to 30 years.
We will consider originating one- to four-family residential real estate loans secured by properties located outside our normal lending area on a case-by-case basis, primarily to preexisting customers with a relationship of one year or longer, and provided the property is located in New York. We offer fixed-rate and adjustable-rate residential mortgage loans with maturities up to 30 years.
His career expands over 20 years in commercial lending with various banks in the Hudson Valley. Age 48. ​ Karen Morgan-D’Amelio, Esq . is the Chief Risk Officer and General Counsel for Rhinebeck Bank and a member of its executive leadership team. She was appointed to these positions in 2014. Prior to joining the Bank, Ms.
His career expands over 20 years in commercial lending with various banks in the Hudson Valley. Age 49. ​ Karen Morgan-D’Amelio, Esq . is the Chief Risk Officer and General Counsel for Rhinebeck Bank and a member of its executive leadership team. She was appointed to these positions in 2014. Prior to joining the Bank, Ms.
Our retail banking offices (and the representative offices noted below) are located in these four counties and serve the surrounding areas. The Hudson Valley region has a diversified economy and representative industries include education, health, government, leisure and hospitality and professional business services. We also maintain a representative office in Albany County to originate indirect automobile and commercial loans.
Our retail banking offices (and the representative offices noted above) are located in these four counties and serve the surrounding areas. The Hudson Valley region has a diversified economy and representative industries include education, health, government, leisure and hospitality and professional business services. We also maintain a representative office in Albany County to originate indirect automobile and commercial loans.
Rhinebeck Bank is required to file reports with, and is periodically examined by, the FDIC and the NYSDFS concerning its activities and financial condition and must obtain regulatory approvals before entering into certain transactions, including mergers with or acquisitions of other financial institutions. This regulatory structure is intended primarily for the protection of the insurance fund and depositors.
Rhinebeck Bank is required to file reports with, and is periodically examined by, the FDIC and the NYSDFS concerning its activities and financial condition and must obtain regulatory approvals before entering into certain transactions, including mergers with or acquisitions of other financial institutions. This regulatory structure is intended primarily for the protection of the Deposit Insurance Fund (“DIF”) and depositors.
The FDIC also has authority to establish individual minimum capital requirements in appropriate cases upon determination that an institution’s capital level is, or is likely to become, inadequate in light of the particular circumstances. At December 31, 2023, Rhinebeck Bank exceeded all of its capital requirements. 23 Table of Contents Standards for Safety and Soundness.
At December 31, 2024, Rhinebeck Bank exceeded all of its capital requirements. 23 Table of Contents The FDIC also has authority to establish individual minimum capital requirements in appropriate cases upon determination that an institution’s capital level is, or is likely to become, inadequate in light of the particular circumstances. Standards for Safety and Soundness.
To further minimize risk, based on our current capital levels and loan portfolio, we have limited the total amount of leveraged loans to $1.0 million with a single obligor while maintaining that the total of all leveraged loans cannot exceed more than 15% of our risk-based capital. We also monitor industry and customer concentrations.
To further minimize risk, based on our current capital levels and loan portfolio, we have limited the total amount of leveraged loans to $1.5 million with a single obligor while maintaining that the total of all leveraged loans cannot exceed more than 15% of our risk-based capital. We also monitor industry and customer concentrations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Allowance for Credit Losses.” ​ Although we believe that we have established the allowance at appropriate levels, future additions may be necessary if economic or other conditions in the future differ from the current environment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations— Significant Accounting Policies, Critical Accounting Estimates—Allowance for Credit Losses.” ​ Although we believe that we have established the allowance at appropriate levels, future additions may be necessary if economic or other conditions in the future differ from the current environment.
At December 31, 2023, Rhinebeck Bank was classified as a “well capitalized” institution. 24 Table of Contents At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, interest rates paid on deposits, payment of dividends, and acceptance of brokered deposits.
At December 31, 2024, Rhinebeck Bank was classified as a “well capitalized” institution. 24 Table of Contents At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, interest rates paid on deposits, payment of dividends, and acceptance of brokered deposits.
At December 31, 2023, this loan was performing according to its original terms. Commercial Construction and Land Development Loans. We originate loans to finance the construction of commercial properties, multi-family projects (including one- to four-family non-owner occupied residential properties) and professional complexes, or to acquire land for development for these purposes.
At December 31, 2024, this loan was performing according to its original terms. Commercial Construction and Land Development Loans. We originate loans to finance the construction of commercial properties, multi-family projects (including one- to four-family non-owner occupied residential properties) and professional complexes, or to acquire land for development for these purposes.
Our underwriting procedures evaluate the credit information relative to the value of the vehicle to be financed. At times, our underwriters may also verify a borrower’s employment income and/or residency and, where appropriate, verify a borrower’s payment history directly with the borrower’s creditors. Based on these procedures, a credit decision is considered.
Our underwriting procedures evaluate the credit information relative to the value of the vehicle to be financed. Our underwriters may also verify a borrower’s employment income and/or residency and, where appropriate, verify a borrower’s payment history directly with the borrower’s creditors. Based on these procedures, a credit decision is considered.
The Bank provides a full range of banking and financial services to consumer and commercial customers through its 14 branches and one representative office located in Dutchess, Ulster and Orange counties. We also maintain a representative office in Albany County to originate indirect automobile and commercial loans.
The Bank provides a full range of banking and financial services to consumer and commercial customers through its 13 branches and one representative office located in Dutchess, Ulster and Orange counties. We also maintain a representative office in Albany County to originate indirect automobile and commercial loans.
At December 31, 2023, Rhinebeck Bank had no capital loss carryovers. Corporate Dividends. We may generally exclude from our income 100% of dividends received from Rhinebeck Bank as a member of the same affiliated group of corporations. As of December 31, 2023, no dividends had been paid by Rhinebeck Bank. Audit of Tax Returns.
At December 31, 2024, Rhinebeck Bank had no capital loss carryovers. Corporate Dividends. We may generally exclude from our income 100% of dividends received from Rhinebeck Bank as a member of the same affiliated group of corporations. As of December 31, 2024, no dividends had been paid by Rhinebeck Bank. Audit of Tax Returns.
No allowance for credit losses for available-for-sale securities was recorded as of December 31, 2023. Portfolio Maturities and Yields. The following table sets forth the stated maturities and weighted average yields of investment securities at December 31, 2023. Weighted average yields are calculated by dividing the income by amortized cost.
No allowance for credit losses for available-for-sale securities was recorded as of December 31, 2024. Portfolio Maturities and Yields. The following table sets forth the stated maturities and weighted average yields of investment securities at December 31, 2024. Weighted average yields are calculated by dividing the income by amortized cost.
At December 31, 2023, each loan in this relationship was performing according to its original repayment terms. Non-Performing Loans and Problem Assets Performance of the loan portfolio is reviewed on a regular basis by Bank management.
At December 31, 2024, each loan in this relationship was performing according to its original repayment terms. Non-Performing Loans and Problem Assets Performance of the loan portfolio is reviewed on a regular basis by Bank management.
The USA PATRIOT Act also required the federal banking agencies to take into consideration the effectiveness of controls designed to combat money laundering activities in determining whether to approve a merger or other acquisition application of a member institution.
The USA PATRIOT Act also required the federal banking agencies to take into consideration the effectiveness of controls designed to combat money laundering activities in determining whether to approve a merger or other acquisition application.
Commercial loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and ultimate collectability of total contractual principal and interest no longer is in doubt. 15 Table of Contents In our collection efforts, we will first attempt to cure any delinquent loan.
Commercial loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and ultimate collectability of total contractual principal and interest no longer is in doubt. In our collection efforts, we will first attempt to cure any delinquent loan.
Thrift institutions that maintain a qualified residential loan portfolio are entitled to a specially computed modification that reduces the income taxable to New York State; this is the case for the Bank. 31 Table of Contents
Thrift institutions that maintain a qualified residential loan portfolio are entitled to a specially computed modification that reduces the income taxable to New York State; this is the case for the Bank. 30 Table of Contents
Federal law requires, among other things, that federal bank regulatory authorities take “prompt corrective action” with respect to banks that do not meet minimum capital requirements. For these purposes, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. The FDIC has adopted regulations to implement the prompt corrective action legislation.
Federal law requires, among other things, that federal bank regulators take “prompt corrective action” with respect to banks that do not meet minimum capital requirements. For these purposes, federal law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. The FDIC has adopted regulations to implement the prompt corrective action legislation.
In no event will we make a commercial or multi-family real estate loan in excess of 17.5% of capital to any one project or property. 11 Table of Contents ● Commercial Business Loans. We will not lend more than 15% of capital to any one borrower, with only 10% of capital lent on an unsecured basis under normal policy.
In no event will we make a commercial or multi-family real estate loan in excess of 17.5% of capital to any one project or property. ● Commercial Business Loans. We will not lend more than 15% of capital to any one borrower, with only 10% of capital lent on an unsecured basis under normal policy.
Rhinebeck Bancorp, MHC Rhinebeck Bancorp, MHC, a New York-chartered non-stock corporation, is a mutual holding company that owns 57.31% of the outstanding common stock of Rhinebeck Bancorp, Inc. Rhinebeck Bank Rhinebeck Bank is a New York-chartered stock savings bank that was organized in 1860.
Rhinebeck Bancorp, MHC Rhinebeck Bancorp, MHC, a New York-chartered non-stock corporation, is a mutual holding company that owns 57.1% of the outstanding common stock of Rhinebeck Bancorp, Inc. Rhinebeck Bank Rhinebeck Bank is a New York-chartered stock savings bank that was organized in 1860.
We strive to maintain a safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by advantageous compensation, benefits, health, and welfare programs. ​ As part of our compensation philosophy, we offer market competitive total rewards programs for our employees in order to attract and retain superior talent.
We strive to maintain a safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by advantageous compensation, benefits, health, and welfare programs. 19 Table of Contents ​ As part of our compensation philosophy, we offer market competitive total rewards programs for our employees in order to attract and retain superior talent.
Reductions of collateral value are based on historical loss experience, current market data, and any other verifiable source of reliable information specific to the collateral. This analysis is inherently subjective, as it requires us to make estimates that are susceptible to revisions as more information becomes available.
Reductions of collateral value are based on historical loss experience, current market data, and any other verifiable source of reliable information specific to the collateral. This analysis is inherently subjective, as it requires us to make estimates that are susceptible to revisions as more information becomes available. Non-Performing Loans.
Rhinebeck Bancorp, MHC must receive the prior approval of the Federal Reserve Board before it may waive the receipt of any dividends from Rhinebeck Bancorp, Inc., and current Federal Reserve Board policy prohibits any mutual holding company that is regulated as a bank holding company, such as Rhinebeck Bancorp, MHC, from waiving the receipt of dividends paid by its subsidiary holding company.
Rhinebeck Bancorp, MHC must receive the prior approval of the Federal Reserve Board before it may waive the receipt of any dividends from Rhinebeck Bancorp, Inc., and current Federal Reserve Board policy prohibits any mutual holding company that is regulated as a bank holding company, such as Rhinebeck Bancorp, MHC, from waiving the receipt of dividends paid by its subsidiary mid-tier stock holding company.
The Bank’s primary business activity is accepting deposits from the general public and using those funds, primarily to originate indirect automobile loans (automobile loans referred to us by automobile dealerships), commercial real estate loans (which includes multi-family real estate loans and commercial construction loans), commercial business loans and one- to four-family residential real estate loans, and to purchase investment securities.
The Bank’s primary business activity is accepting deposits from the general public and using those funds together with borrowings, primarily to originate indirect automobile loans (automobile loans referred to us by automobile dealerships), commercial real estate loans (which includes multi-family real estate loans and commercial construction loans), commercial business loans and one- to four-family residential real estate loans, and to purchase investment securities.
We offer financing to purchase land for development with a maximum loan-to-value ratio of 50%. Before making a commitment to fund a commercial construction loan, we generally require an appraisal of the property by an independent licensed appraiser. The construction phase is carefully monitored to minimize our risk.
We offer financing to purchase land for development with a maximum loan-to-value ratio of 50%. 8 Table of Contents Before making a commitment to fund a commercial construction loan, we generally require an appraisal of the property by an independent licensed appraiser. The construction phase is carefully monitored to minimize our risk.
If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. 10 Table of Contents Our ability to originate construction loans is dependent on the strength of the housing and commercial markets in our region.
If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. Our ability to originate construction loans is dependent on the strength of the housing and commercial markets in our region.
Write downs of OREO that occur after the initial transfer from the loan portfolio and costs of holding the property are recorded within other operating expenses, except for significant improvements, which are capitalized to the extent that the carrying value does not exceed estimated net realizable value.
Write downs of OREO that occur after the initial transfer from the loan portfolio and costs of holding the property are 12 Table of Contents recorded within other operating expenses, except for significant improvements, which are capitalized to the extent that the carrying value does not exceed estimated net realizable value.
Depending on the size of the loan or other extension of credit, prior approval of the Bank’s Board of Directors (with the interested party, if a director, abstaining from participating directly or indirectly in the voting) may be required. 22 Table of Contents Federal Bank Regulation Supervision and Enforcement Authority.
Depending on the size of the loan or other extension of credit, prior approval of the Bank’s Board of Directors (with the interested party, if a director, abstaining from participating directly or indirectly in the voting) may be required. Federal Bank Regulation Supervision and Enforcement Authority.
Rhinebeck Bank’s most recent rating under New York law was “Satisfactory.” Consumer Protection and Fair Lending Regulations. Rhinebeck Bank is subject to a variety of federal and New York statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.
Rhinebeck Bank’s most recent rating under New York’s community reinvestment law was “Satisfactory.” Consumer Protection and Fair Lending Regulations. Rhinebeck Bank is subject to a variety of federal and New York statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.
Acquisition of more than 10% of any class of a bank holding company’s voting securities constitutes a rebuttable presumption of control under certain circumstances, including where, as will be the case with Rhinebeck Bancorp, Inc., the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.
Acquisition of more than 10% of any class of a bank holding company’s voting securities constitutes a rebuttable presumption of control under certain circumstances, including where, as is the case with Rhinebeck Bancorp, Inc., the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.
Where appropriate, we also require corporate guarantees or personal guarantees. We monitor borrowers’ and guarantors’ financial information on an ongoing basis by requiring periodic financial statement updates. At December 31, 2023, our largest multi-family real estate loan had an outstanding balance of $14.5 million and was secured by an apartment complex located in Poughkeepsie, New York.
Where appropriate, we also require corporate guarantees or personal guarantees. We monitor borrowers’ and guarantors’ financial information on an ongoing basis by requiring periodic financial statement updates. At December 31, 2024, our largest multi-family real estate loan had an outstanding balance of $14.1 million and was secured by an apartment complex located in Poughkeepsie, New York.
In the future, Rhinebeck Bancorp, MHC may convert from the mutual to capital stock form of ownership, in a transaction commonly referred to as a “second-step conversion.” Any second-step conversion of Rhinebeck Bancorp, MHC would require the approval of the NYSDFS and the Federal Reserve Board. 28 Table of Contents Acquisition.
In the future, Rhinebeck Bancorp, MHC may convert from the mutual to capital stock form of ownership, in a transaction commonly referred to as a “second-step conversion.” Any second-step conversion of Rhinebeck Bancorp, MHC would require the approval of the NYSDFS and the Federal Reserve Board. Acquisition.
Depending on the individual circumstances, initial charge-offs and subsequent losses on commercial or multi-family real estate loans can be unpredictable and substantial. 9 Table of Contents To monitor cash flows on income properties, we require borrowers and loan guarantors, if any, to provide financial statements on the business operations underlying the commercial and multi-family real estate loans on an ongoing basis.
Depending on the individual circumstances, initial charge-offs and subsequent losses on commercial or multi-family real estate loans can be unpredictable and substantial. To monitor cash flows on income properties, we require borrowers and loan guarantors, if any, to provide financial statements on the business operations underlying the commercial and multi-family real estate loans on an ongoing basis.
Any New York savings bank that does not operate according to the regulations, policies and directives of the NYSDFS may be subject to sanctions for non-compliance, including seizure of the property and business of the savings bank and suspension or revocation of its charter.
Any New York savings bank that does not operate according to the regulations, policies and directives of the NYSDFS may be subject to enforcement action for non-compliance, including seizure of the property and business of the savings bank and suspension or revocation of its charter.
These statutes and regulations provide for a range of sanctions for non-compliance with their terms, including imposition of administrative fines and remedial orders, and referral to the Attorney General for prosecution of a civil action for actual and punitive damages and injunctive relief.
These statutes and regulations provide for a range of enforcement actions for non-compliance with their terms, including imposition of administrative fines and remedial orders, and referral to the Attorney General for prosecution of a civil action for actual and punitive damages and injunctive relief.
The Change in Bank Control Act and related regulations provide that no person or entity may acquire control of a bank holding company, such as Rhinebeck Bancorp, Inc., without the prior non-objection or approval of the Federal Reserve Board.
The Change in Bank Control Act and its implementing regulations provide that no person or entity may acquire control of a bank holding company, such as Rhinebeck Bancorp, Inc., without the prior non-objection or approval of the Federal Reserve Board.
Moreover, since Rhinebeck Bancorp, Inc. has sold only a minority of its shares to the public and contributed the remaining shares to Rhinebeck Bancorp, MHC, Rhinebeck Bancorp, Inc. raised significantly less capital than would have been the case if it sold all its shares to the public.
Moreover, since Rhinebeck Bancorp, Inc. has sold only a minority of its shares to the public and 28 Table of Contents contributed the remaining shares to Rhinebeck Bancorp, MHC, Rhinebeck Bancorp, Inc. raised significantly less capital than would have been the case if it sold all its shares to the public.
In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Direct costs may be required to rehabilitate or prepare the property to be marketed.
In addition, 9 Table of Contents vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Direct costs may be required to rehabilitate or prepare the property to be marketed.
Rhinebeck Bancorp, Inc. also is subject to the rules and regulations of the SEC under the federal securities laws. 21 Table of Contents Set forth below is a brief description of material regulatory requirements that are applicable to Rhinebeck Bancorp, Inc., Rhinebeck Bancorp, MHC and Rhinebeck Bank.
Rhinebeck Bancorp, Inc. also is subject to the rules and regulations of the SEC under the federal securities laws. Set forth below is a brief description of material regulatory requirements that are applicable to Rhinebeck Bancorp, Inc., Rhinebeck Bancorp, MHC and Rhinebeck Bank.
As a bank holding company, Rhinebeck Bancorp, Inc. is required to comply with the rules and regulations of the Federal Reserve Board and the NYSDFS. It is required to file certain reports with the Federal Reserve Board and is subject to examination by and the enforcement authority of the Federal Reserve Board and the NYSDFS.
As a bank holding company, Rhinebeck Bancorp, Inc. is required to comply with the rules and regulations of the Federal Reserve Board and the NYSDFS. They are required to file certain reports with the Federal Reserve Board and are subject to examination by and the enforcement authority of the Federal Reserve Board and the NYSDFS.
These programs include annual bonus opportunities, an Employee Stock Ownership Plan, a stock compensation plan, a matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, adoption assistance, education reimbursement program, and employee assistance programs. ​ 19 Table of Contents We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization.
These programs include annual bonus opportunities, an Employee Stock Ownership Plan, an equity incentive plan, a matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, adoption assistance, education reimbursement program, and employee assistance programs. ​ We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization.
We acquire our indirect automobile loans from 85 automobile dealerships located in the Hudson Valley region and 35 dealers located in the Albany area, under an arrangement where the dealer receives a flat fee for referring the loan to us, which is known as dealer participation or dealer reserve.
We acquire our indirect automobile loans from 61 automobile dealerships located in the Hudson Valley region and 30 dealers located in the Albany area, under an arrangement where the dealer receives a flat fee for referring the loan to us, which is known as dealer participation or dealer reserve.
Section 22(h) of the Federal Reserve Act also requires that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in comparable transactions to other persons and also requires prior board approval for certain loans.
Section 22(h) of the Federal Reserve Act also requires that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in comparable transactions to other unaffiliated persons, and also requires prior approval by a majority of the board of directors for certain loans.
At December 31, 2023, the Company classified $6.3 million of loans as Substandard, of which $3.0 million were commercial real estate loans, $1.6 million were residential loans, $967,000 were commercial and industrial loans, $631,000 were indirect automobile loans, $99,000 were home equity loans and $25,000 were other consumer loans.
At December 31, 2023, the Company classified $6.3 million of loans as Substandard, Doubtful or Non-performing, of which $3.0 million were commercial real estate loans, $1.6 million were residential loans, $967,000 were commercial and industrial loans, $631,000 were indirect automobile loans, $99,000 were home equity loans and $25,000 were other consumer loans.
Separately, any company that acquires control of a bank holding company, as “control” is defined in the federal Bank Holding Company Act, must receive the prior approval of the Federal Reserve Board under that law and becomes a “bank holding company” subject to examination and regulation by the Federal Reserve Board. New York Holding Company Regulation.
Separately, any company that acquires control of a bank holding company, as “control” is defined in the federal Bank Holding Company Act and the Federal Reserve Board’s regulations, must receive the prior approval of the Federal Reserve Board and becomes a “bank holding company” subject to examination and regulation by the Federal Reserve Board. New York Holding Company Regulation.
Federal law required the Federal Reserve Board to establish for all bank and savings and loan holding companies minimum consolidated capital requirements that are as stringent as those required for the insured depository subsidiaries.
Federal law required the Federal Reserve Board to establish for all bank holding companies minimum consolidated capital requirements that are as stringent as those required for the insured depository subsidiaries.
At December 31, 2023, this loan was performing according to its original terms. 5 Table of Contents Commercial Business Loans. We originate commercial business loans and lines of credit to a variety of small- and medium-sized businesses in our market area. Our commercial business borrowers include professional organizations, family-owned businesses, and not-for-profit organizations.
At December 31, 2024, this loan was performing according to its original terms. Commercial Business Loans. We originate commercial business loans and lines of credit to a variety of small- and medium-sized businesses in our market area. Our commercial business borrowers include professional organizations, family-owned businesses, and not-for-profit organizations.
In addition, generally during the term of a construction loan, interest may be funded by the lender or disbursed from an interest reserve set aside from the construction loan budget.
In addition, generally during the term of a construction loan, interest may be funded by the lender or disbursed from an interest reserve set aside from the 10 Table of Contents construction loan budget.
We believe our commitment to demonstrating our core values, actively prioritizing concern for our employees’ well-being, supporting our employees’ career goals, offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing employees. ​ As of December 31, 2023, we had 164 full-time employees and nine part-time employees.
We believe our commitment to demonstrating our core values, actively prioritizing concern for our employees’ well-being, supporting our employees’ career goals, offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing employees. ​ As of December 31, 2024, we had 157 full-time employees and 11 part-time employees.
He has held various titles since joining the Bank including VP, Commercial Lending, SVP Commercial Lending and SVP and Senior Lending Officer. Age 58. ​ 20 Table of Contents Philip Bronzi joined the Bank in 2012 as the Vice President of Lending. He became the Senior Vice President of Lending in 2018 and was named Chief Lending Officer in 2021.
He has held various titles since joining the Bank including VP, Commercial Lending, SVP Commercial Lending and SVP and Senior Lending Officer. Age 59. ​ Philip Bronzi joined the Bank in 2012 as the Vice President of Lending. He became the Senior Vice President of Lending in 2018 and was named Chief Lending Officer in 2021.
All of these loans are secured by properties located in our primary market area. We also had undrawn amounts on the commercial construction loans totaling $35.4 million at December 31, 2023. Our construction and land development loans are generally structured as two-year interest-only balloon loans.
All of these loans are secured by properties located in our primary market area. We also had undrawn amounts on the commercial construction loans totaling $24.6 million at December 31, 2024. Our commercial construction and land development loans are generally structured as two-year interest-only balloon loans.
The trust preferred securities mature 30 years from the date of issuance and bear interest at a rate equal to the three-month CME term Secured Overnight Financing Rate (“SOFR”) plus 2% and a relative spread adjustment of 0.26%. The interest rate on these securities at December 31, 2023 was 7.64%.
The trust preferred securities mature 30 years from the date of issuance and bear interest at a rate equal to the three-month CME term Secured Overnight Financing Rate (“SOFR”) plus 2% and a relative spread adjustment of 0.26%. The interest rate on these securities at December 31, 2024 was 6.78%.
The term “net profits” is generally defined to mean earnings from current operations, subject to certain adjustments provided for under applicable law. Loans to Directors and Executive Officers.
The term “net profits” is generally defined to mean earnings from current operations, subject to certain adjustments provided for under applicable law. 22 Table of Contents Loans to Directors and Executive Officers.
Other consumer loans had net recoveries of $3,000 for the year ended December 31, 2023 as compared to net charge-offs of $52,000 for the year ended December 31, 2022. ​ Allocation of Allowance for Credit Losses.
Other consumer loans had net recoveries of $3,000 for the year ended December 31, 2023 as compared to net charge-offs of $108,000 for the year ended December 31, 2024. ​ Allocation of Allowance for Credit Losses.
Information about our Executive Officers ​ The following listing sets forth the name, principal position, recent business experience and age (as of December 31, 2023) of each executive officer: ​ Michael J. Quinn is President and CEO of Rhinebeck Bank.
Information about our Executive Officers ​ The following listing sets forth the name, principal position, recent business experience and age (as of December 31, 2024) of each executive officer: ​ Michael J. Quinn is President and Chief Executive Officer (“CEO”) of Rhinebeck Bank.
We owned shares of FHLB common stock at December 31, 2023 equal to what we were required to own to maintain our membership in the Federal Home Loan Bank System and was necessary to support the balance of our advances. We are required to purchase stock as our outstanding advances increase and sell stock as the size of borrowings decrease.
We owned shares of FHLB common stock at December 31, 2024 equal to what we were required to own to maintain our membership in the FHLB system and was necessary to support the balance of our advances. We are required to purchase stock as our outstanding advances increase and sell stock as the size of borrowings decrease.
We view Orange and Albany Counties, which have larger populations than Dutchess and Ulster Counties, as primary areas for growth. Based on published statistics, the U.S. unemployment rate was 3.7%, while the New York State unemployment rate was 4.5% as of December 31, 2023.
We view Orange and Albany Counties, which have larger populations than Dutchess and Ulster Counties, as primary areas for growth. Based on published statistics, the U.S. unemployment rate was 4.1%, while the New York State unemployment rate was 4.4% as of December 31, 2024.
Loans are usually restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Non-performing Loans.
Loans are usually restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. We use the accrual method of accounting for all performing loans.
We also originate rehabilitation loans, enabling the borrower to partially or totally refurbish an existing structure, which are structured as a construction loan and monitored in the same manner. At December 31, 2023, commercial construction and land development loans totaled $20.2 million, or 2.0% of our total loan portfolio.
We also originate rehabilitation loans, enabling the borrower to partially or totally refurbish an existing structure, which are structured as a construction loan and monitored in the same manner. At December 31, 2024, commercial construction and land development loans totaled $26.6 million, or 2.7% of our total loan portfolio.
In addition, the FDIC is authorized to permit state-chartered banks and savings banks to engage in state-authorized activities or investments not permissible for national banks (other than non-subsidiary equity investments) if it meets all applicable capital requirements and it is determined that such activities or investments do not pose a significant risk to the Deposit Insurance Fund.
In addition, the FDIC is authorized to permit state-chartered banks and savings banks to engage in state-authorized activities or investments not permissible for national banks (other than non-subsidiary equity investments) if they meet all applicable capital requirements and it is determined that such activities or investments do not pose a significant risk to the DIF.
At December 31, 2023, our investment portfolio had a fair value of $192.0 million and consisted primarily of U.S. Government securities, U.S. Government agency securities, including residential and collateralized mortgage-backed securities, municipal securities and corporate bonds in the form of subordinated bank debt.
At December 31, 2024, our investment portfolio had a fair value of $159.9 million and consisted primarily of U.S. Government securities, U.S. Government agency securities, including residential and collateralized mortgage-backed securities, municipal securities and corporate bonds in the form of subordinated bank debt.
Generally, Section 23A of the Federal Reserve Act and the Federal Reserve Board’s Regulation W limits the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10.0% of the bank’s capital stock and surplus, and with all transactions with all affiliates to an amount equal to 20.0% of the bank’s capital stock and surplus.
Generally, Section 23A of the Federal Reserve Act and the Federal Reserve Board’s Regulation W, as made applicable to the Bank by the Federal Deposit Insurance Act, limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10.0% of the bank’s capital stock and surplus, and with all transactions with all affiliates to an amount equal to 20.0% of the bank’s capital stock and surplus.
At December 31, 2023, our automobile loans to borrowers with credit scores of 639 or less at origination totaled $36.3 million, or 9.2% of our total indirect automobile loan portfolio. We typically will not originate these types of loans with loan-to-value ratios greater than 100% of the sales price of the automobile or debt-to-income ratios greater than 40%.
At December 31, 2024, our automobile loans to borrowers with credit scores of 639 or less at origination totaled $27.1 million, or 9.2% of our total indirect automobile loan portfolio. We typically do not originate these types of loans with loan-to-value ratios greater than 100% of the sales price of the automobile or debt-to-income ratios greater than 40%.
In addition, funds are derived from scheduled loan and investment payments, investment maturities, loan sales, loan prepayments, retained earnings and income on earning assets.
In addition, funds are derived from scheduled loan and investment 17 Table of Contents payments, investment maturities, loan sales, loan prepayments, retained earnings and income on earning assets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWeaknesses in the global economy and global supply chain issues may adversely affect businesses operating in our market. ​ A deterioration in economic conditions in the market areas we serve as a result of inflation, a recession, the effects of COVID-19 or other factors could result in the following consequences, any of which could have a materially adverse impact on our business, financial condition and results of operations: ​ ● loan delinquencies, problem assets and foreclosures may increase; ● we may increase our allowance for credit losses; ● demand for our products and services may decline possibly resulting in a decrease in our total loans, total deposits, or assets; ● collateral for loans may decline in value, thereby reducing customers’ borrowing power, and reducing the value of assets and collateral associated with existing loans; ● the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and ● the amount of our low-cost or non-interest bearing deposits may decrease and the composition of our deposits may be adversely affected. ​ A decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose operations and real estate loans are geographically diverse.
Biggest changeNegative changes in these general business and economic conditions could have the following consequences, any of which could have a materially adverse impact on our business, financial condition and results of operations: ​ ● loan delinquencies, problem assets and foreclosures may increase; ● our allowance for credit losses may increase; ● demand for our products and services may decline possibly resulting in a decrease in our total loans, total deposits, or assets; ● collateral for loans may decline in value, thereby reducing customers’ borrowing power, and reducing the value of assets and collateral associated with existing loans; ● the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and ● the amount of our low-cost or non-interest bearing deposits may decrease and the composition of our deposits may be adversely affected. ​ Inflation can have an adverse impact on our business and on our customers. ​ Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
If we are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth or deposit outflows, we may be forced seek other sources of funds, including other certificates of deposit, FHLB advances, brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers, which may be more expensive and have an adverse effect on our net interest margin and profitability.
If we are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth or deposit outflows, we may be forced seek other sources of funds, including certificates of deposit, FHLB advances, brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers, which may be more expensive and have an adverse effect on our net interest margin and profitability.
Factors such as our financial results, the introduction of new products and services by us or our competitors, publicity regarding the banking industry, and various other factors affecting the banking industry may have a significant impact on the market price of the shares the common stock.
Factors such as our financial results, the introduction of new products and services by us or our competitors, publicity regarding the banking industry, and various other factors affecting the banking industry may have a significant impact on the market price of the shares of our common stock.
Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability.
Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or regulations or more stringent interpretations or enforcement policies with respect to existing laws or regulations may increase our exposure to environmental liability.
Accordingly, we could suffer losses if we fail to properly anticipate and manage these risks. Risks Relating to Ownership of Our Common Stock We may not pay any dividends on our common stock. The Company’s board of directors has the authority to declare dividends on our common stock subject to statutory and regulatory requirements.
We could suffer losses if we fail to properly anticipate and manage these risks. Risks Relating to Ownership of Our Common Stock We may not pay any dividends on our common stock. The Company’s Board of Directors has the authority to declare dividends on our common stock subject to statutory and regulatory requirements.
The application of more stringent capital requirements could, among other things, require us to maintain higher capital levels resulting in lower returns on equity, and result in regulatory actions if we were to be unable to comply with such requirements.
The application of more stringent capital requirements could, among other things, require us to maintain higher capital levels resulting in lower returns on equity, raise capital and result in regulatory actions if we were to be unable to comply with such requirements.
Factors such as inflation, recession and instability in financial markets, among other factors beyond our control, may affect interest rates. 33 Table of Contents If interest rates rise, and the interest rates on our deposits increase faster than the interest rates we receive on our loans and investments, our interest rate spread would decrease, which would have a negative effect on our net interest income and profitability.
Factors such as inflation, recession and instability in financial markets, among other factors beyond our control, may affect interest rates. 32 Table of Contents If interest rates rise, and the interest rates on our deposits increase faster than the interest rates we receive on our loans and investments, our interest rate spread would decrease, which would have a negative effect on our net interest income and profitability.
Rhinebeck Bancorp, MHC owns a majority of the Company’s common stock and, through its board of directors, are able to exercise voting control over most matters put to a vote of stockholders. Generally, the same directors and officers who manage Rhinebeck Bank also manage the Company and Rhinebeck Bancorp, MHC.
Rhinebeck Bancorp, MHC owns a majority of the Company’s common stock and, through its Board of Directors, is able to exercise voting control over most matters put to a vote of stockholders. Generally, the same directors and officers who manage Rhinebeck Bank also manage the Company and Rhinebeck Bancorp, MHC.
Supervision and Regulation — Federal Bank Regulation — Capital Requirements.” 37 Table of Contents Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations. The effects of climate change continue to create a significant level of concern for the state of the global environment.
Supervision and Regulation — Federal Bank Regulation — Capital Requirements.” Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations. The effects of climate change continue to create a significant level of concern for the state of the global environment.
Business — Waivers of Dividends by Rhinebeck Bancorp, MHC.” 41 Table of Contents Our common stock is not heavily traded, and the stock price may fluctuate significantly. Our common stock is traded on The NASDAQ Capital Market (ticker symbol “RBKB”), but the volume of shares traded is relatively low.
Business — Waivers of Dividends by Rhinebeck Bancorp, MHC.” Our common stock is not heavily traded, and the stock price may fluctuate significantly. Our common stock is traded on The NASDAQ Capital Market (ticker symbol “RBKB”), but the volume of shares traded is relatively low.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us. ​ Risks Related to Our Funding ​ Our inability to generate core deposits may cause us to rely more heavily on wholesale funding strategies for funding and liquidity needs, which could have an adverse effect on our net interest margin and profitability.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us. 34 Table of Contents ​ Risks Related to Our Funding and Liquidity ​ Our inability to generate core deposits may cause us to rely more heavily on wholesale funding strategies for funding and liquidity needs, which could have an adverse effect on our net interest margin and profitability.
As a result of the increased political and social awareness surrounding the issue, the U.S. Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global effort to combat climate change.
As a result of the increased political and social awareness surrounding the issue, the U.S. Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global 37 Table of Contents effort to combat climate change.
Our failure to maintain or reduce our operating expenses may reduce our profits. Our non-interest expenses totaled $36.4 million and $37.4 million for the years ended December 31, 2023 and 2022, respectively. Although we have decreased our expenses and have achieved certain efficiencies, our efficiency ratio, comparative to peers, remains high.
Our failure to maintain or reduce our operating expenses may reduce our profits. Our non-interest expenses totaled $36.8 million and $36.4 million for the years ended December 31, 2024 and 2023, respectively. Although we have decreased our expenses and have achieved certain efficiencies, our efficiency ratio, comparative to peers, remains high.
Business — Loan Underwriting Risks.” ​ 34 Table of Contents Our emphasis on commercial real estate and commercial business lending involves risks that could adversely affect our financial condition and results of operations. We emphasize the originations of commercial real estate and commercial business loans.
Business — Loan Underwriting Risks.” ​ Our emphasis on commercial real estate and commercial business lending involves risks that could adversely affect our financial condition and results of operations. We emphasize the originations of commercial real estate and commercial business loans.
Our liquidity is also affected by a decrease in the ability to sell mortgage portfolios as a result of our decision to retain more mortgage loans in the portfolio, higher market interest rates negatively impacting originations, a downturn in our markets or by one or more adverse regulatory actions against us.
Our liquidity is also affected by a decrease in the sale of mortgage loans as a result of our decision to retain more mortgage loans in the portfolio, higher market interest rates negatively impacting originations, a downturn in our markets or by one or more adverse regulatory actions against us.
Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees. Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results.
Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees. 40 Table of Contents Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results.
Increases in interest rates generally decrease the fair value of securities available for sale, which adversely impacts stockholders' equity. On December 31, 2023, we recorded other comprehensive losses, net of tax, of $26.1 million related to net changes in unrealized holding losses in our available-for-sale investment securities portfolio.
Increases in interest rates generally decrease the fair value of securities available for sale, which adversely impacts stockholders' equity. On December 31, 2024, we recorded other comprehensive losses, net of tax, of $10.5 million related to net changes in unrealized holding losses in our available-for-sale investment securities portfolio.
Risks Related to Economic Conditions Our business may be adversely affected by downturns in the national economy and in the economies in our market areas. ​ Substantially all of our loans are to businesses and individuals in the Hudson Valley region of New York.
Risks Related to Economic Conditions Our business may be adversely affected by downturns in the local economy. ​ Substantially all of our loans are to businesses and individuals in the Hudson Valley region of New York.
We are subject to extensive regulation, supervision and examination by our banking regulators. Such regulation and supervision govern the activities in which a financial institution and its holding company may engage and are intended primarily for the protection of insurance funds and the depositors and borrowers of Rhinebeck Bank rather than for the protection of our stockholders.
Such regulation and supervision govern the activities in which a financial institution and its holding company may engage and are intended primarily for the protection of insurance funds and the depositors and borrowers of Rhinebeck Bank rather than for the protection of our stockholders.
Our efficiency ratio totaled 83.28% and 78.4% for the years ended December 31, 2023 and 2022, respectively. Failure to control or maintain our expenses may reduce future profits. Changes in the valuation of our securities portfolio may reduce our profits and our capital levels.
Our efficiency ratio totaled 82.34% and 83.28% for the years ended December 31, 2024 and 2023, respectively. Failure to control or maintain our expenses may reduce future profits. 39 Table of Contents Changes in the valuation of our securities portfolio may reduce our profits and our capital levels.
While these types of loans are potentially more profitable than residential mortgage loans due primarily to bearing generally higher interest rates and larger balances, they are generally more sensitive to regional and local economic conditions, making future losses more difficult to predict, and possibly more likely.
While these types of loans are potentially more profitable than residential mortgage loans due primarily to bearing generally higher interest rates and larger balances, they present greater risk due to greater dependency on the successful operation of the properties, and are generally more sensitive to regional and local economic conditions, making future losses more difficult to predict.
There can be no assurance that the Company’s allowance for credit losses will be adequate to cover actual losses. In addition, federal and state regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or recognize further loan charge-offs. Significant additions to the allowance could materially decrease our net income.
In addition, federal and state regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or recognize further loan charge-offs. Significant additions to the allowance could materially decrease our net income.
If so, we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property.
In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If so, we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property.
Our Board of Directors takes an active role in our cybersecurity risk management and all members receive cybersecurity training annually. The Board reviews the annual risk assessments and approves information technology policies, which include cybersecurity. Furthermore, our Audit Committee is responsible for reviewing all audit findings related to information technology general controls, internal and external vulnerability, and penetration testing.
The Board reviews the annual risk assessments and approves information technology policies, which include cybersecurity. Furthermore, our Audit Committee is responsible for reviewing all audit findings related to information technology general controls, internal and external vulnerability, and penetration testing.
In addition, advances in computer capabilities, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the algorithms we and our third-party service providers use to encrypt and protect customer transaction data. A failure of such security measures could have a material adverse effect on our financial condition and results of operations.
In addition, advances in computer capabilities, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the algorithms we and our third-party service providers use to encrypt and protect customer transaction data.
Changes in interest rates may also have an adverse effect on our financial condition, as our available-for-sale securities are reported at their estimated fair value, and therefore are affected by fluctuations in interest rates.
Changes in interest rates may also have an adverse effect on our financial condition, as our available-for-sale securities are reported at their estimated fair value, and therefore are affected by fluctuations in interest rates. We increase or decrease our stockholders’ equity by the amount of change in the estimated fair value of the available-for-sale securities, net of taxes.
As inflation increased, the value of our investment securities, particularly those with longer maturities, decreased. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expenses.
In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expenses.
Our non-owner occupied commercial real estate loans may expose us to increased credit risk. ​ At December 31, 2023, $304.8 million, or 30.2% of our total loan portfolio and 71.2% of our commercial real estate loan portfolio, consisted of loans secured by non-owner occupied commercial real estate loans.
Our non-owner occupied commercial real estate loans may expose us to increased credit risk. ​ At December 31, 2024, $361.6 million, or 37.1% of our total loan portfolio and 74.9% of our commercial real estate loan portfolio, consisted of loans secured by non-owner occupied commercial real estate loans.
At December 31, 2023, our commercial real estate (which includes multi-family real estate loans and commercial construction loans) and commercial business loans totaled $517.0 million, or 51.3% of our loan portfolio.
At December 31, 2024, our commercial real estate (which includes multi-family real estate loans and commercial construction loans) and commercial business loans totaled $574.1 million, or 58.9% of our loan portfolio.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations. 40 Table of Contents The value of our goodwill may decline in the future.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations. 35 Table of Contents Risk Related to our Business Strategy Our long-term business strategy involves moderate growth, and our financial condition and results of operations may be adversely affected if we fail to grow or fail to manage our growth effectively.
The greater resources and broader offering of deposit and loan products of some of our competitors may also limit our ability to increase our interest-earning assets. Competition also makes it more difficult and costly to attract and retain qualified employees. For more information about our market area and the competition we face, see “Item 1.
If we are unable to effectively compete in our market area, our profitability would be negatively affected. The greater resources and broader offering of deposit and loan products of some of our competitors may also limit our ability to increase our interest-earning assets. Competition also makes it more difficult and costly to attract and retain qualified employees.
We maintain an allowance for credit losses, which is established through a provision for credit losses that represents management’s best estimate of the lifetime expected losses on loans.
Business — Loan Underwriting Risks.” Our allowance for credit losses may not be sufficient to cover actual loan losses. We maintain an allowance for credit losses, which is established through a provision for credit losses that represents management’s best estimate of the lifetime expected losses on loans.
Recessionary conditions or adverse economic conditions in our local market areas may reduce our rate of growth, affect our customers' ability to repay loans and adversely impact our business, financial condition, and results of operations. General economic conditions, including inflation, unemployment and money supply fluctuations, also may adversely affect our profitability.
Recessionary conditions or adverse economic conditions in our local market areas may reduce our rate of growth, affect our customers' ability to repay loans and adversely impact our business, financial condition, and results of operations. ​ A decline in economic conditions could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could have an adverse effect on our results of operations. ​ General economic conditions, including inflation, unemployment, money supply fluctuations and the shape of the interest rate curve may adversely affect our profitability.
Our assets decreased $22.8 million, or 1.7%, from $1.336 billion at December 31, 2022 to $1.313 billion at December 31, 2023, primarily due to decreases in cash and available for sale securities, partially offset by an increase in loans. We expect the balance sheet to decrease next year due to the rebalancing of our portfolio and then stabilize in 2025.
Our assets decreased $57.4 million, or 4.4%, from $1.31 billion at December 31, 2023 to $1.26 billion at December 31, 2024, primarily due to decreases in loans and available for sale securities. Due to the rebalancing of our portfolio, we expect the size of our balance sheet to stabilize in 2025.
A deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations. ​ Risks Related to Interest Rates ​ Changes in interest rates may reduce our profits.
A deterioration in economic conditions in the United States and our markets could result in an increase in loan 31 Table of Contents delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations. ​ Changes to trade policies and tariffs can have an adverse impact on our business and our customers. ​ Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively impact the economic conditions in the markets we serve.
In addition, the physical condition of non-owner occupied properties may be below that of owner occupied properties due to lenient property maintenance standards that negatively impact the value of the collateral properties. 35 Table of Contents We are subject to environmental liability risk associated with lending activities. ​ A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties.
In addition, the physical condition of non-owner occupied properties may be below that of owner occupied properties due to lenient property maintenance standards that negatively impact the value of the collateral properties. ​ We are subject to environmental liability risk associated with lending activities.
The market value of our securities portfolio may fluctuate, potentially increasing accumulated other comprehensive loss or reducing earnings. At December 31, 2023, our other comprehensive losses, net of tax, of $26.1 million was related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
At December 31, 2024, our other comprehensive losses, net of tax, of $10.5 million was related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
If we do not manage our growth effectively, we may not be able to execute our business plan, which would have an adverse effect on our financial condition and results of operations. 36 Table of Contents Risks Related to Laws and Regulations Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.
If we do not manage our growth effectively, we may not be able to execute our business plan, which would have an adverse effect on our financial condition and results of operations.
Such provisions will also render the removal of the Company’s board of directors and of management more difficult and, therefore, may serve to perpetuate current management.
Such provisions will also render the removal of the Company’s board of directors and of management more difficult and, therefore, may serve to perpetuate current management. These provisions could potentially adversely affect the market prices of the Company’s securities. ​ ​ Item 1B. Unresolved Staff Comments Not applicable.
Any change in such regulation and oversight, whether in the form of regulatory policy, new regulations, legislation or supervisory action, may have a material impact on our operations. Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.
Any change in such regulation and oversight, whether in the form of regulatory policy, new regulations, legislation or supervisory action, may have a material impact on our operations. Further, compliance with such regulation may increase our costs and limit our ability to pursue business opportunities.
The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and bank regulators, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
Changes in accounting standards could affect reported earnings. The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and bank regulators, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements.
Many of the loans in our portfolio are secured by real estate. Deterioration in the real estate markets where collateral for a mortgage loan is located could negatively affect the borrower's ability to repay the loan and the value of the collateral securing the loan.
Deterioration in the real estate markets where collateral for a mortgage loan is located could negatively affect the borrower's ability to repay the loan and the value of the collateral securing the loan. Real estate values are affected by various other factors, including changes in general or regional economic conditions, government regulations or policies and natural disasters.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, these policies and procedures may not be effective in preventing violations of these laws and regulations. Changes in accounting standards could affect reported earnings.
Failure to comply with these regulations could result in fines or sanctions, including restrictions on conducting acquisitions or establishing new branches. While we have developed policies and procedures designed to assist in compliance with these laws and regulations, these policies and procedures may not be effective in preventing violations of these laws and regulations.
Business — Market Area” and “— Competition.” A lack of liquidity could adversely affect our financial condition and results of operations and result in regulatory limits being placed on the Company. Liquidity is essential to our business.
Total deposits decreased $9.7 million, or 0.9%, to $1.02 billion at December 31, 2024 from $1.03 billion at December 31, 2023. ​ A lack of liquidity could adversely affect our financial condition and results of operations and result in regulatory limits being placed on the Company. Liquidity is essential to our business.
At December 31, 2023, $394.2 million, or 39.1% of our total loan portfolio and 30.0% of our total assets, consisted of indirect automobile loans, which represented loans originated through automobile dealers for the purchase of new or used automobiles. At that date, $7.0 million, or 6.9% of our total loan portfolio, consisted of automobile loans that we also originated directly.
At December 31, 2024, $295.7 million, or 30.3% of our total loan portfolio and 23.5% of our total assets, consisted of indirect automobile loans and $5.7 million, or 0.6% of our total loan portfolio, consisted of automobile loans that we also originated directly.
In addition, Rhinebeck Bancorp, MHC may exercise its voting control to prevent a sale or merger transaction in which stockholders could receive a premium for their shares. The Company’s Articles of Incorporation and Bylaws and Maryland law may discourage a corporate takeover.
Our directors and officers, or Rhinebeck Bancorp, MHC, may take action that the public stockholders believe to be contrary to their interests. For example, Rhinebeck Bancorp, MHC may exercise its voting control to prevent a sale or merger transaction in which stockholders could receive a premium for their shares.
It is possible that we could incur significant costs associated with a breach of our computer systems. While we have cyber liability insurance, there are limitations on coverage. Furthermore, cyber incidents carry a great risk of injury to our reputation.
A failure of such security measures could have a material impact on the Bank’s operations or a material adverse effect on our financial condition and results of operations. It is possible that we could incur significant costs associated with a breach of our computer systems. While we have cyber liability insurance, there are limitations on coverage.
Finally, depending on the type of incident, banking regulators can impose restrictions on our business and consumer laws may require reimbursement of customer losses. 38 Table of Contents While our Board of Directors takes an active role in cybersecurity risk tolerance, we rely to a large degree on management and outside consultants in overseeing cybersecurity risk management.
Furthermore, cyber incidents carry a great risk of injury to 38 Table of Contents our reputation. Finally, depending on the type of incident, banking regulators can impose restrictions on our business and consumer laws may require reimbursement of customer losses.
The CECL methodology substantially changed how the Company calculates its allowance for credit losses, and the ongoing impact of the adoption is dependent on various factors, including credit quality, macroeconomic forecasts and conditions, composition of our loans and securities portfolios, and other management judgements.
The allowance for credit losses is dependent on various factors, including credit quality, macroeconomic forecasts and conditions, composition of our loans and securities portfolios, and other management judgements. There can be no assurance that the Company’s allowance for credit losses will be adequate to cover actual losses.
The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network.
If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers that open new financial accounts.
The annual inflation rate in the United States hit a high in June of 2022 at 9.1% and has been substantially reduced to 3.4% as of December 31, 2023. The Federal Reserve increased the target federal funds rate, up 425 basis points in 2022 to combat inflation.
In the United States, the annual inflation rate peaked at 9.1% in June 2022. By December 31, 2024, it had decreased to 2.9%. The Federal Reserve increased the target federal funds rate to combat inflation.
These loans also generally have relatively large balances to single borrowers or related groups of borrowers. In addition, changes in consumer preferences about where they work, live, shop and eat can also impact commercial real estate, which could result in declines in occupancy and declines in property values.
In addition, changes in consumer preferences about where they 33 Table of Contents work, live, shop and eat can also impact commercial real estate, which could result in declines in occupancy and declines in property values. Accordingly, any charge-offs may be larger on a per loan basis than those incurred with our residential or consumer loans. See “Item 1.
During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties.
A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans.
Price competition for loans and deposits sometimes requires us to charge lower interest rates on our loans and pay higher interest rates on our deposits, which may reduce our net interest income. Many of the institutions with which we compete have substantially greater resources and lending limits than we have and may offer services that we do not provide.
Strong competition within our market area may reduce our profits and slow growth. We face strong competition in making loans and attracting deposits. Price competition for loans and deposits sometimes requires us to charge lower interest rates on our loans and pay higher interest rates on our deposits, which may reduce our net interest income.
Our board of directors and officers or Rhinebeck Bancorp, MHC may take action that the public stockholders believe to be contrary to their interests. The only matters that stockholders other than Rhinebeck Bancorp, MHC are able to exercise voting control currently include any proposal to implement stock-based benefit plans or a “second-step” conversion.
The only matters that public stockholders are able to exercise voting control over include proposals to implement stock-based benefit plans or initiate a “second-step” conversion. 41 Table of Contents The Company’s Articles of Incorporation and Bylaws and Maryland law may discourage a corporate takeover.
Our competitors often aggressively price loan and deposit products when they enter into new lines of business or new market areas. If we are unable to effectively compete in our market area, our profitability would be negatively affected.
Many of the institutions with which we compete have substantially greater resources and lending limits than we have and may offer services that we do not provide. Our competitors often aggressively price loan and deposit products when they enter into new lines of business or new market areas.
If we are required to liquidate a significant amount of collateral during a period of reduced real estate values, our financial condition and profitability could be adversely affected. ​ ​ 32 Table of Contents Lawmakers’ failure to address the federal debt ceiling in a timely manner, downgrades of the U.S. credit rating and uncertain credit and financial market conditions may affect the stability of securities issued or guaranteed by the federal government, which may affect the valuation or liquidity of our investment securities portfolio and increase future borrowing costs.
If we are required to liquidate a significant amount of collateral during a period of reduced real estate values, our financial condition and profitability could be adversely affected.
Removed
Real estate values are affected by various other factors, including changes in general or regional economic conditions, government regulations or policies and natural disasters.
Added
A decline in local economic conditions may have a greater effect on our earnings and capital than on larger financial institutions whose operations and real estate loans are geographically diverse. Many of the loans in our portfolio are secured by real estate.
Removed
As a result of uncertain political, credit and financial market conditions, including the potential consequences of the federal government defaulting on its obligations for a period of time due to federal debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose credit default and liquidity risks.
Added
However, in 2024, the Federal Reserve implemented one 50 basis point and two 25 basis point rate cuts, bringing the target range to 4.25% to 4.50% by December 2024. As inflation increased, the value of our investment securities, particularly those with longer maturities, decreased.
Removed
Given that future deterioration in the U.S. credit and financial markets is a possibility, no assurance can be made that losses or significant deterioration in the fair value of our U.S. government issued or guaranteed investments will not occur.
Added
Our customers—particularly local businesses engaged in agriculture, manufacturing, and retail—may face higher costs for imported goods and materials, reduced export demand, and supply chain disruptions due to increased tariffs. These challenges could lead to lower revenues, reduced profitability, and potential layoffs, all of which may impair our customers’ ability to meet their financial obligations.
Removed
At December 31, 2023, we had approximately $23.2 million and $128.6 million in U.S. government agency securities and residential mortgage-backed securities issued or guaranteed by government-sponsored enterprises, respectively, and $24.0 million in U.S. treasury securities.
Added
Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values, and weakened consumer confidence. If our customers experience financial stress, we could see an increase in loan delinquencies and credit losses, negatively affecting our asset quality and overall financial performance.
Removed
Downgrades to the U.S. credit rating could affect the stability of securities issued or guaranteed by the federal government and the valuation or liquidity of our portfolio of such investment securities, and could result in our counterparties requiring additional collateral for our borrowings.
Added
Additionally, any decline in local economic activity could reduce loan demand, deposit growth, and fee income, which are critical to our long-term success. While we actively monitor economic and policy developments, we cannot predict the outcome of trade negotiations or the full impact of tariffs and trade restrictions on our business, customers, and the broader economy.
Removed
Further, unless and until U.S. political, credit and financial market conditions have been sufficiently resolved or stabilized, we may face increases in our future borrowing costs. ​ Inflation can have an adverse impact on our business and on our customers. ​ Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
Added
Any adverse effects from tariffs or a trade war could materially and negatively impact our financial condition, results of operations, and future growth prospects. ​ Interruption of our customers' supply chains could negatively impact their business and operations and impact their ability to repay their loans. ​ Any material interruption in our customers’ supply chains, such as a material interruption of the resources required to conduct their business resulting from interruptions in service by third-party providers, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, social or labor unrest, natural disasters, epidemics or pandemics or political disputes and military conflicts, that cause a material disruption in our customers' supply chains, could have a negative impact on their business and ability to repay their borrowings with us.
Removed
Sustained higher interest rates by the Federal Reserve to tame persistent inflationary price pressures could also push down asset prices and weaken economic activity.
Added
In the event of disruptions in our customers' supply chains, the labor and materials they rely on in the ordinary course of business may not be available at reasonable rates or at all. ​ ​ Risks Related to Interest Rates ​ Changes in interest rates may reduce our profits.
Removed
Accordingly, any charge-offs may be larger on a per loan basis than those incurred with our residential or consumer loans. See “Item 1. Business — Loan Underwriting Risks.” Our allowance for credit losses may not be sufficient to cover actual loan losses.
Added
These loans also generally have relatively large balances to single borrowers or related groups of borrowers. Also, many of our borrowers have more than one of these types of loans outstanding.
Removed
The Company adopted the current expected credit loss model (“CECL”), effective January 1, 2023, which replaced the previous “incurred loss” model for measuring credit losses with an “expected life of loan loss” model referred to as the CECL model.
Added
Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a residential mortgage loan.
Removed
In this regard, total deposits decreased $99.4 million, or 8.8%, to $1.031 billion at December 31, 2023 from $1.130 billion at December 31, 2022. The decrease in deposits has led the Bank to increase Federal Home Loan Bank advances in recent periods to fund loan growth and to maintain on-balance sheet liquidity.
Added
Risks Related to Laws and Regulations Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations. We are subject to extensive regulation, supervision and examination by our banking regulators.
Removed
This has resulted in an increase from $57.7 million in FHLB advances at December 31, 2022 to $128.1 million at December 31, 2023 and a corresponding increase in borrowing expense to $5.1 million for the year ended December 31, 2023 as compared to $1.1 million for the year ended December 31, 2022. ​ Risk Related to our Business Strategy Our long-term business strategy involves moderate growth, and our financial condition and results of operations may be adversely affected if we fail to grow or fail to manage our growth effectively.
Added
The fiscal, monetary and regulatory policies of the federal government and its agencies could have an adverse effect on our results of operations. In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the FRB. An important function of the FRB is to regulate the money supply and credit environment.
Removed
These rules require financial institutions to establish procedures for identifying and verifying the identity of customers that open new financial accounts. Failure to comply with these regulations could result in fines or sanctions, including restrictions on conducting acquisitions or establishing new branches.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework. ​ Risk Management Personnel ​ The vCISO directly reports to the General Counsel and CRO. The vCISO, CRO and the SVP, Information Technology meet regularly to discuss both internal and external cybersecurity risks and incidents.
Biggest changeThis review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework. ​ Risk Management Personnel ​ The vCISO and the Information Security Officer directly report to the General Counsel and CRO.
The Board has established oversight mechanisms to ensure effective governance in managing these risks because it recognizes the significance of these threats to our operational integrity, shareholder and customer confidence and reputation. ​ Board of Directors Oversight ​ The Board is responsible for the oversight of cybersecurity risk management and is composed of members with diverse expertise in risk management, technology, and finance, thereby equipping them to manage and prevent cybersecurity risks effectively. ​ Management’s Role in Managing Risk ​ The General Counsel and Chief Risk Officer (“CRO”), the SVP, Information Technology, the virtual Chief Information Security Officer (“vCISO”) employed by DeepSeas Security, a cyber defense services business that partners with customers to reduce cybersecurity risks and the related costs.
The Board has established oversight mechanisms to ensure effective governance in managing these risks because it recognizes the significance of these threats to our operational integrity, shareholder and customer confidence and reputation. ​ Board of Directors Oversight ​ The Board is responsible for the oversight of cybersecurity risk management and is composed of members with diverse expertise in risk management, technology, and finance, thereby equipping them to manage and prevent cybersecurity risks effectively. ​ Management’s Role in Managing Risk ​ The risk management function is led by the General Counsel and Chief Risk Officer (“CRO”), the SVP, Information Technology, the Information Security Officer, and the virtual Chief Information Security Officer (“vCISO”) employed by DeepSeas Security, a cyber defense services business that partners with customers to reduce cybersecurity risks and the related costs.
In the event of a cybersecurity incident, our partnership with DeepSeas Security allows us to be equipped with a well-defined incident response plan that is adequately resourced. This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevent future incidents. ​
In the event of a cybersecurity incident, our partnership with DeepSeas Security allows us to be equipped with a well-defined incident response plan that is adequately resourced. This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevent future incidents. ​ 44 Table of Contents
Our vCISO oversees our governance programs, works with our technology-focused leaders and partners to align security and compliance, and has helped define our employee security awareness training program. 44 Table of Contents ​ Monitoring Cybersecurity Incidents ​ The vCISO is informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques.
Our vCISO oversees our governance programs, works with our technology-focused leaders and partners to align security and compliance, and has helped define our employee security awareness training program. ​ Monitoring Cybersecurity Incidents ​ The vCISO is informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques.
We also employ a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats.
We also employ a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent 42 Table of Contents threats.
We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure compliance with strict cybersecurity standards. ​ Risks from Cybersecurity Threats ​ We have not encountered any cybersecurity incidents, directly or indirectly, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition. ​ 43 Table of Contents Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
We conduct thorough security assessments of all third-party providers with access to Customer Non-Public Information before engagement and maintain ongoing monitoring to ensure compliance with strict cybersecurity standards. ​ Risks from Cybersecurity Threats ​ We have not encountered any cybersecurity incidents, directly or indirectly, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition. ​ Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
These briefings encompass a broad range of topics, including: ​ ● Current cybersecurity landscape and emerging threats; ● Status of ongoing cybersecurity initiatives and strategies; ● Incident reports and issues identified from any cybersecurity events; and ● Compliance with regulatory requirements and industry standards. ​ In addition to our regularly scheduled Board meetings, the General Counsel and CRO, the SVP, Information Technology, the vCISO and the CEO regularly communicate regarding emerging or potential cybersecurity risks.
These briefings encompass a broad range of topics, including: 43 Table of Contents ​ ● The current cybersecurity landscape and emerging threats; ● The status of ongoing cybersecurity initiatives and strategies; ● Incident reports and issues identified from any cybersecurity events; and ● Compliance with regulatory requirements and industry standards. ● Vulnerability/patch reporting for end points on the Bank’s network ​ In addition to our regularly scheduled Board meetings, the General Counsel and CRO, the SVP, Information Technology, the vCISO and the CEO regularly communicate regarding emerging or potential cybersecurity risks.
Item 1C. Cybersecurity Risk Management and Strategy Rhinebeck Bank recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
Item 1C. Cybersecurity Risk Management and Strategy Rhinebeck Bank recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. Cybersecurity risk management is an integral part of our overall enterprise risk management program.
The structure of our information security program is designed around the Federal Financial Institutions Examination Council Cybersecurity Guidelines, regulatory guidance, and other industry standards.
The structure of our information security program is designed around the Federal Financial Institutions Examination Council Cybersecurity Guidelines, regulatory guidance, and other industry standards. In addition, we leverage certain industry and government associations, third-party benchmarking, audits and threat intelligence feeds to facilitate and promote program effectiveness.
The CRO and the SVP, Information Technology also regularly meet with the CEO to update him on any cybersecurity risks and incidents affecting us. This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing Rhinebeck Bank.
This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing Rhinebeck Bank.
In addition, we leverage certain industry and government associations, third-party benchmarking, audits and threat intelligence feeds to facilitate and promote program effectiveness. ​ Managing Material Risks & Integrated Overall Risk Management ​ Rhinebeck Bank has strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management.
We continuously monitor evolving regulatory requirements related to cybersecurity and ensure that our cybersecurity program fully complies with all applicable laws and standards. ​ Managing Material Risks and Integrated Overall Risk Management ​ Rhinebeck Bank has strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management.
Added
The vCISO, CRO, the SVP, Information Technology, and Information Security Officer meet regularly to discuss both internal and external cybersecurity risks and incidents. The CRO, the SVP, Information Technology and the Information Security Officer also regularly meet with the CEO to update him on any cybersecurity risks and incidents affecting us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOn November 16, 2023, the Bank entered into an agreement with Heritage Financial Credit Union, a New York State chartered credit union, to sell the Bank’s Beacon branch office in Wappingers Falls, New York, for $2.9 million subject to the receipt of applicable regulatory approvals and other customary closing conditions.
Biggest changeIn the first quarter of 2024, the Bank sold the Bank’s Beacon branch office in Wappingers Falls, New York, for $2.9 million to Heritage Financial Credit Union, a New York State chartered credit union. The sale included the land and building, including all branch premises and equipment.
Item 2. Properties At December 31, 2023, we conducted business through our corporate office in Poughkeepsie and 14 other retail banking offices located in Rhinebeck, Fishkill, Goshen, Hopewell Junction, Hyde Park, Kingston, Middletown, Newburgh, Poughkeepsie (three branch offices), Red Hook, Wappingers Falls and Warwick, as well as two representative offices in Montgomery and Albany.
Item 2. Properties At December 31, 2024, we conducted business through our corporate office in Poughkeepsie and 13 other retail banking offices located in Rhinebeck, Fishkill, Goshen, Hopewell Junction, Hyde Park, Kingston, Middletown, Newburgh, Poughkeepsie (three branch offices), Red Hook and Warwick, as well as two representative offices in Montgomery and Albany.
We own seven and lease nine properties, and own three other buildings situated on land controlled under long-term leases. At December 31, 2023, the net book value of our land, buildings, furniture, fixtures and equipment was $17.6 million.
We own six and lease nine properties, and own three other buildings situated on land controlled under long-term leases. At December 31, 2024, the net book value of our land, buildings, furniture, fixtures and equipment was $14.1 million.
The sale includes the land and building as well of all branch premises and equipment. All of the branch accounts have been redomiciled to the customer’s nearest branch and all employees will be placed in open positions. An impairment expense of $375,000 was taken on the property in December 2023. The closing date of the branch was February 23, 2024.
All of the branch accounts were redomiciled to the customer’s nearest branch and all employees were placed in open positions. An impairment expense of $375,000 was taken on the property in December 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt December 31, 2023, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 45 Table of Contents PART II
Biggest changeAt December 31, 2024, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 45 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 45 PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 Item 6. [ Reserved] 46 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 63
Biggest changeItem 4. Mine Safety Disclosures 45 PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 Item 6. [ Reserved] 46 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed2 unchanged
Biggest changeSee “Item1. Business — Waivers of Dividends by Rhinebeck Bancorp, MHC.” In September 2022, the Board approved a stock repurchase plan pursuant to which the Company was authorized to repurchase up to 247,506 shares of its common stock.
Biggest changeSee “Item1. Business — Waivers of Dividends by Rhinebeck Bancorp, MHC.” In September 2022, the Board approved a stock repurchase plan pursuant to which the Company was authorized to repurchase up to 247,506 shares of its common stock, of which 47,506 shares remain available for repurchase. The repurchase plan has no expiration date.
No shares were repurchased under the stock repurchase plan during the three months ended December 31, 2023. ​ There were no sales of unregistered securities during the quarter ended December 31, 2023. ​
No shares were repurchased under the stock repurchase plan during the three months ended December 31, 2024. ​ There were no sales of unregistered securities during the quarter ended December 31, 2024. ​
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of the Company is listed on The NASDAQ Capital Market under the symbol “RBKB”. At February 28, 2023, the Company had 346 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of the Company is listed on The NASDAQ Capital Market under the symbol “RBKB”. At February 28, 2025, the Company had 332 stockholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+20 added−28 removed48 unchanged
Biggest changeThe estimation methodologies for credit losses on unfunded lending-related commitments are similar to the process for estimating credit losses for loans, although with the addition of a probability of draw estimate that is applied to each loan portfolio segment. ​ ​ 49 Table of Contents The following table shows the impact of adoption on the allowance for credit losses on loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As reported under ASU 2016-13 on January 1, 2023 ​ As reported prior to ASU 2016-13 on December 31, 2022 ​ Impact of adoption ​ ​ (In thousands) Commercial real estate: ​ ​ ​ Construction ​ $ — ​ $ — ​ $ — Non-residential ​ $ 1,885 ​ $ 2,652 ​ $ (767) Multifamily ​ $ 286 ​ $ 379 ​ $ (93) Residential real estate ​ $ 157 ​ $ 103 ​ $ 54 Commercial and industrial ​ $ 498 ​ $ 881 ​ $ (383) Consumer: ​ ​ ​ ​ ​ Indirect automobile ​ $ 5,578 ​ $ 3,868 ​ $ 1,710 Home equity ​ $ 31 ​ $ 18 ​ $ 13 Other consumer ​ $ 88 ​ $ 42 ​ $ 46 Total ​ $ 8,523 ​ $ 7,943 ​ $ 580 ​ The Company’s allowance for credit losses for loans totaled $8.1 million and $8.5 million as of December 31, 2023 and January 1, 2023, respectively.
Biggest changeThe estimation methodologies for credit losses on unfunded lending-related commitments are similar to the process for estimating credit losses for loans, although with the addition of a probability of draw estimate that is applied to each loan portfolio segment. ​ The Company’s allowance for credit losses for loans totaled $8.5 million and $8.1 million as of December 31, 2024 and December 31, 2023, respectively.
Our primary sources of non-interest income are service charges on deposit accounts, investment advisory income and net gains in the cash surrender value of bank owned life insurance and other income. Non-Interest Expenses.
Our primary sources of non-interest income are service charges on deposit accounts, investment advisory income, net gains in the cash surrender value of bank owned life insurance and other income. Non-Interest Expenses.
The above table assumes that the composition of our interest-sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities.
The table above assumes that the composition of our interest-sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities.
Goodwill is not amortized, but it is tested at least annually, or more frequently if indicators of impairment are present. ​ Management evaluated goodwill as of October 1, 2023, utilizing various methods including an income approach that incorporated a discounted cash flow model that involved management assumptions based upon future growth and earnings projections.
Goodwill is not amortized, but it is tested at least annually, or more frequently if indicators of impairment are present. ​ Management evaluated goodwill as of October 1, 2024, utilizing various methods including an income approach that incorporated a discounted cash flow model that involved management assumptions based upon future growth and earnings projections.
If for any future period it is determined that there has been impairment in the carrying value of our goodwill balances, the Company will record a charge to earnings, which could have a material adverse effect on net income, but not risk based capital ratios. ​ ​ 51 Table of Contents Income Taxes ​ We are subject to the income tax laws of the United States, New York State, and the municipalities in which we operate.
If for any future period it is determined that there has been impairment in the carrying value of our goodwill balances, the Company will record a charge to earnings, which could have a material adverse effect on net income, but not risk-based capital ratios. ​ ​ Income Taxes ​ We are subject to the income tax laws of the United States, New York State, and the municipalities in which we operate.
Additional funds available under this line are not included in the table above as we do not consider it to be as readily accessible as the funds above. The following table summarizes our main contractual obligations and other commitments to make future payments as of December 31, 2023.
Additional funds available under this line are not included in the table above as we do not consider it to be as readily accessible as the funds above. The following table summarizes our main contractual obligations and other commitments to make future payments as of December 31, 2024.
We set the interest rates on our deposits in an attempt to maintain a desired level of total deposits. 61 Table of Contents As reported in the Consolidated Statements of Cash Flows, our cash flows are classified for financial reporting purposes as operating, investing, or financing cash flows.
We set the interest rates on our deposits in an attempt to maintain a desired level of total deposits. 60 Table of Contents As reported in the Consolidated Statements of Cash Flows, our cash flows are classified for financial reporting purposes as operating, investing, or financing cash flows.
(2) Represents the difference between interest earned and interest paid, divided by average total interest earning assets. ​ ​ 59 Table of Contents Rate/Volume Analysis ​ The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
(2) Represents the difference between interest earned and interest paid, divided by average total interest earning assets. ​ ​ 58 Table of Contents Rate/Volume Analysis ​ The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
By following these strategies, we believe that we can be better positioned to react to changes in market interest rates. 60 Table of Contents Net Economic Value Simulation. We analyze our sensitivity to changes in interest rates through a net economic value of equity (“EVE”) model.
By following these strategies, we believe that we can be better positioned to react to changes in market interest rates. 59 Table of Contents Net Economic Value Simulation. We analyze our sensitivity to changes in interest rates through a net economic value of equity (“EVE”) model.
We currently calculate EVE under the assumptions that interest rates increase 100 to 400 basis points from current market rates and that interest rates decrease from 100 to 400 basis points from current market rates. The following table presents the estimated changes in our EVE that would result from changes in market interest rates at December 31, 2023.
We currently calculate EVE under the assumptions that interest rates increase 100 to 400 basis points from current market rates and that interest rates decrease from 100 to 400 basis points from current market rates. The following table presents the estimated changes in our EVE that would result from changes in market interest rates at December 31, 2024.
Our primary sources of liquidity are deposits, loan sales, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations, as well as access to FHLB advances and other borrowings.
Our primary sources of liquidity are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations, as well as access to FHLB advances and other borrowings.
The $400,000 decrease in our allowance for credit losses for loans was primarily driven by a decrease in our collectively evaluated loans, partially offset by an increase in the allowance for credit losses on individually analyzed loans.
The $415,000 increase in our allowance for credit losses for loans was primarily driven by an increase in our collectively evaluated loans, partially offset by a decrease in the allowance for credit losses on individually analyzed loans.
Our strategy for credit risk management focuses on an experienced team of credit professionals, well-defined and implemented credit policies and procedures, conservative loan underwriting criteria and active credit monitoring. Our ratio of non-performing loans to total assets was 0.32% at December 31, 2023, which decreased from 0.33% at December 31, 2022. ● Grow the balance sheet.
Our strategy for credit risk management focuses on an experienced team of credit professionals, well-defined and implemented credit policies and procedures, conservative loan underwriting criteria and active credit monitoring. Our ratio of non-performing loans to total assets was 0.33% at December 31, 2024, which increased from 0.32% at December 31, 2023. ● Grow the balance sheet.
For 2023, we did not engage in any off-balance-sheet transactions other than loan origination commitments and standby letters of credit in the normal course of our lending activities. 62 Table of Contents Impact of Inflation and Changing Prices The financial statements and related notes of the Company have been prepared in accordance with United States GAAP.
For 2024, we did not engage in any off-balance-sheet transactions other than loan origination commitments and standby letters of credit in the normal course of our lending activities. 61 Table of Contents Impact of Inflation and Changing Prices The financial statements and related notes of the Company have been prepared in accordance with United States GAAP.
While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan sales and prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by our competition.
While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows, loan sales and prepayments are greatly influenced by market interest rates, economic conditions, interest rate risk management and rates offered by our competition.
As previously mentioned, actual as well as forecasted increases in delinquencies and net charge-offs for automobile loans drove management’s increase in qualitative loss factors. ​ Our allowance for credit losses for individually analyzed loans is determined on an individual basis using the fair value of the collateral, less estimated selling costs, as applicable.
As previously mentioned, actual as well as forecasted increases in delinquencies and net charge-offs for automobile loans drove management’s increase in qualitative loss factors. ​ Our allowance for credit losses for individually analyzed loans is determined using the fair value of the collateral, less estimated selling costs, as applicable.
Our non-interest expense was $36.4 million and $37.4 million for the years ended December 31, 2023 and 2022, respectively. ● Manage credit risk to maintain a low level of non-performing assets. We believe that strong asset quality is a key to long-term financial success.
Our non-interest expense was $36.8 million and $36.4 million for the years ended December 31, 2024 and 2023, respectively. ● Manage credit risk to maintain a low level of non-performing assets. We believe that strong asset quality is a key to long-term financial success.
As such, this does not necessarily reflect the nature and extent of future changes in the allowance for reasons including increases or decreases in qualitative adjustments, changes in the risk profile, changes in the severity of the macroeconomic scenario and the range of scenarios under management consideration. ​ Goodwill and Intangible Assets ​ The assets (including identifiable intangible assets) and liabilities acquired in a business combination are recorded at fair value at the date of acquisition.
As such, this does not necessarily reflect the nature and extent of future changes in the allowance for reasons including increases or decreases in qualitative adjustments, changes in the risk profile of the portfolio, changes in the macroeconomic scenario and/or the range of scenarios under management consideration. ​ 50 Table of Contents Goodwill and Intangible Assets ​ The assets (including identifiable intangible assets) and liabilities acquired in a business combination are recorded at fair value at the date of acquisition.
A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized. ​ 47 Table of Contents Business Strategy Based on an extensive review of the current opportunities in our primary market area as well as our resources and capabilities, we are pursuing the following business strategies: ● Maintain our indirect automobile loan portfolio while limiting growth.
A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized. ​ 47 Table of Contents Business Strategy Based on an extensive review of the current opportunities in our primary market area as well as our resources and capabilities, we are pursuing the following business strategies: ● Prudent management of our indirect automobile loan portfolio.
The statutory tax rate is impacted by the benefits derived mainly from tax-exempt bond income and income received on the bank owned life insurance to arrive at the effective tax rate. ​ 58 Table of Contents Average Balance Sheets for the Years Ended December 31, 2023 and 2022 The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated.
The statutory tax rate was impacted by the benefits derived mainly from tax-exempt bond income and income received on the bank owned life insurance to arrive at the effective tax rate. ​ 57 Table of Contents Average Balance Sheets for the Years Ended December 31, 2024 and 2023 The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated.
The quantitative component of our allowance for credit losses on collectively evaluated loans, which is largely based on a selection of various economic forecasts, decreased by $506,000 as of December 31, 2023, when compared to January 1, 2023.
The quantitative component of our allowance for credit losses on collectively evaluated loans, which is largely based on a selection of various economic forecasts, decreased by $151,000 as of December 31, 2024, when compared to December 31, 2023.
By providing our customers with quality service, coupled with a home-town ambience, we expect to return to a period of strong organic growth. 48 Table of Contents Critical Accounting Policies Our most significant accounting policies are described in Note 1 to the consolidated financial statements.
By providing our customers with quality service, a home-town ambience and local decision making, we expect to return to a period of strong organic growth. 48 Table of Contents Significant Accounting Policies, Critical Accounting Estimates Our most significant accounting policies are described in Note 1 to the consolidated financial statements.
Core deposits, which we define as all non time deposits, represented 69.1% of our total deposits at December 31, 2023 compared to 80.9% at December 31, 2022.
Core deposits, which we define as all non time deposits, represented 66.9% of our total deposits at December 31, 2024 compared to 69.1% at December 31, 2023.
In the normal course of operations, we engage in a variety of financial transactions that, in accordance with GAAP are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk.
In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles (“GAAP”) are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk.
The CECL model requires that we make assumptions of credit quality, macroeconomic factors and conditions, and loan composition which are inherently subjective due to the use of estimates that are susceptible to significant revision as more information becomes available or as future events occur.
The Company adopted the CECL model beginning on January 1, 2023, which requires that we make assumptions of credit quality, macroeconomic factors and conditions, and loan composition which are inherently subjective due to the use of estimates that are susceptible to significant revision as more information becomes available or as future events occur.
Based on our model, if all segments of the portfolio grew by an additional 5% on a year-over-year basis, our allowance for credit losses as of December 31, 2023, would have increased by $394,000 to $8.5 million, holding all other variables constant.
Based on our model, if all segments of the portfolio grew by an additional 5% on a year-over-year basis, our allowance for credit losses as of December 31, 2024 would have increased by $418,000 to $9.0 million, holding all other variables constant.
Net cash provided by operating activities was $7.0 million and $14.8 million for the years ended December 31, 2023 and 2022, respectively. These amounts differ from our net income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods.
Net cash provided by operating activities was $8.5 million and $7.0 million for the years ended December 31, 2024 and 2023, respectively. These amounts differ from our net income because of certain cash receipts and disbursements that did not affect net income for the respective periods.
Our effective tax rate for the year ended December 31, 2023 was 21.71% compared to 21.35% in 2022.
Our effective tax rate for the year ended December 31, 2024 was 21.18% compared to 21.71% in 2023.
These agencies may require us to recognize adjustments to the allowance, based on their judgments about information available to them at the time of their examination. ​ The Company recorded a provision for credit losses of $1.7 million for the year ended December 31, 2023, an increase of $288,000, or 20.4%, as compared to $1.4 million for the year ended December 31, 2022.
These agencies may require us to recognize adjustments to the allowance, based on their judgments about information available to them at the time of their examination. ​ The Company recorded a provision for credit losses of $2.8 million for the year ended December 31, 2024, an increase of $1.1 million, or 64.5%, as compared to $1.7 million for the year ended December 31, 2023.
It is our opinion that, as of the measurement date, the aggregate fair value of the reporting unit exceeded the carrying value of the reporting unit. Therefore, management concluded that goodwill was not impaired. Although we believe our assumptions are reasonable, actual results may vary significantly and it is impossible to know the future impact of evolving economic conditions.
It is our opinion that, as of the measurement date, the aggregate fair value of the reporting unit exceeded the carrying value of the reporting unit. Therefore, management concluded that goodwill was not impaired. Although we believe our assumptions are reasonable, actual results may vary significantly.
Our allowance for credit losses was 0.81% of total loans and 194.31% of non-performing loans at December 31, 2023 as compared to 0.80% of total loans and 179.54% of non-performing loans at December 31, 2022. Federal Home Loan Bank Stock.
Our allowance for credit losses was 0.88% of total loans and 206.56% of non-performing loans at December 31, 2024 as compared to 0.81% of total loans and 194.31% of non-performing loans at December 31, 2023. Federal Home Loan Bank Stock.
Deposit and borrowing cash flows have traditionally comprised most of our financing activities, which resulted in a net cash outflow $31.0 million in the year ended December 31, 2023, as opposed to a net cash inflow of $68.1 million in fiscal year 2022.
Deposit and borrowing cash flows have traditionally comprised most of our financing activities, which resulted in a net cash outflow $67.9 million in the year ended December 31, 2024, as compared to $31.0 million in fiscal year 2023.
Our reciprocal deposits obtained through the CDARS and ICS networks totaled $23.4 million and $16.7 million, respectively, at December 31, 2023. At December 31, 2022, we had reciprocal deposits obtained through CDARS of $10.0 million. We had no brokered deposits at December 31, 2023 and $34.0 million in brokered deposits at December 31, 2022. ​ Borrowed Funds.
Our reciprocal deposits obtained through the CDARS and ICS networks totaled $25.4 million and $13.5 million, respectively, at December 31, 2024. At December 31, 2023, we had reciprocal deposits obtained through CDARS and ICS networks of $23.4 million and $16.7 million, respectively. We had no brokered deposits at December 31, 2024 and 2023. ​ Borrowed Funds.
(6) Represents average equity divided by average total assets. (7) Capital ratios are for Rhinebeck Bank only. Rhinebeck Bancorp, Inc. is not subject to the minimum consolidated capital requirements as a small bank holding company with assets less than $3.0 billion.
(6) Represents average equity divided by average total assets. (7) Capital ratios are for Rhinebeck Bank only. Rhinebeck Bancorp, Inc. is not subject to the minimum consolidated capital requirements as a small bank holding company with assets less than $3.0 billion. ​ 53 Table of Contents Comparison of Financial Condition at December 31, 2024 and December 31, 2024 Total Assets.
Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations. ​ The following accounting policies materially affect our reported earnings and financial condition and require significant judgments and estimates. ​ Allowance for Credit Losses ​ The allowance for credit losses is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
The following accounting policies materially affect our reported earnings and financial condition and require significant judgments and estimates. ​ Allowance for Credit Losses ​ The allowance for credit losses is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
Non-accrual loans decreased $243,000, or 5.5%, to $4.2 million at December 31, 2023 from $4.4 million at December 31, 2022. Non-performing assets decreased $218,000, or 4.9%. Non-performing assets included $25,000 in other real estate owned as of December 31, 2023. The Company had no other real estate owned as of December 31, 2022.
Non-accrual loans decreased $47,000, or 1.1%, to $4.1 million at December 31, 2024 from $4.2 million at December 31, 2023. Non-performing assets decreased $72,000, or 1.7%. Non-performing assets included $25,000 in other real estate owned as of December 31, 2023. The Company had no other real estate owned as of December 31, 2024.
The costs of interest bearing liabilities increased 165 basis points to 2.44% in 2023 from 0.79% in 2022 driven by increases in general market rates, competitive forces and a greater percentage of higher-yielding certificates of deposits and FHLB advances.
The costs of interest bearing liabilities increased 43 basis points to 2.87% in 2024 from 2.44% in 2023 driven by increases in general market rates, competitive market forces and a greater percentage of higher-yielding certificates of deposits and FHLB advances. The interest rate spread increased by 5 basis points to 2.49%.
Net cash provided by investing activities was $14.7 million in 2023 as compared to net cash used for investing activities of $123.6 million in 2022. Net cash provided by or used in investing activities principally reflects our investment security and loan activities in the respective periods.
Net cash provided by investing activities was $74.7 million in 2024 as compared to $14.7 million in 2023. Net cash provided by investing activities principally reflects our investment security and loan activities in the respective periods.
Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
The percentage of overdue account balances to total loans decreased to 1.90% as of December 31, 2023 from 2.29% as of December 31, 2022, while non-performing assets decreased $218,000, or 4.9%, to $4.2 million at December 31, 2023. ​ Non-Interest Income.
The percentage of overdue account balances to total loans decreased to 1.71% as of December 31, 2024, from 1.90% as of December 31, 2023 and non-performing assets decreased $72,000, or 1.7%, to $4.1 million at December 31, 2024. ​ Non-Interest Income.
Net interest income decreased $3.9 million, or 9.3%, to $38.0 million for the year ended December 31, 2023, as compared to $41.8 million for the year ended December 31, 2022. The decrease was primarily driven by higher costs on higher interest-bearing liability balances, which were partially offset by higher yields on higher interest-earning asset balances.
Net interest income increased $266,000, or 0.7%, to $38.2 million for the year ended December 31, 2024, as compared to $38.0 million for the year ended December 31, 2023. The increase was primarily driven by higher yields on interest-earning asset balances, which were partially offset by higher costs on interest-bearing liability balances.
A favorable tax settlement would result in a reduction in our effective income tax rate in the period of resolution. ​ 52 Table of Contents Selected Financial Data The following selected consolidated financial data sets forth certain financial highlights of the Company and should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2023 2022 ​ ​ (In thousands) Selected Financial Condition Data: ​ ​ ​ ​ ​ ​ Total assets ​ $ 1,313,202 ​ $ 1,335,977 Cash and cash equivalents ​ 22,129 ​ 31,384 Securities available-for-sale ​ 191,985 ​ 223,659 Loans receivable, net ​ 1,008,851 ​ 994,368 Bank owned life insurance ​ 30,031 ​ 29,794 Goodwill and other intangibles ​ 2,481 ​ 2,569 ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ 1,199,517 ​ 1,227,845 Deposits ​ 1,030,503 ​ 1,129,933 Federal Home Loan Bank advances ​ 128,064 ​ 57,723 Subordinated debt ​ 5,155 ​ 5,155 ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ $ 113,685 ​ $ 108,132 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ 2023 2022 ​ ​ (In thousands, except per share data) Selected Operating Data: ​ ​ ​ ​ ​ ​ Interest and dividend income ​ $ 60,659 ​ $ 48,592 Interest expense ​ 22,694 ​ 6,756 Net interest income ​ 37,965 ​ 41,836 Provision for credit losses ​ 1,702 ​ 1,414 Net interest income after provision for credit losses ​ 36,263 ​ 40,422 Non-interest income ​ 5,780 ​ 5,896 Non-interest expense ​ 36,429 ​ 37,422 Income before income tax expense ​ 5,614 ​ 8,896 Income tax expense ​ 1,219 ​ 1,899 Net income ​ $ 4,395 ​ $ 6,997 Earnings per share (diluted) ​ $ 0.40 ​ $ 0.64 ​ 53 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended December 31, ​ 2023 2022 Performance Ratios: Return on average assets (1) 0.33 % 0.54 % Return on average equity (2) 4.03 % 6.06 % Interest rate spread (3) 2.44 % 3.22 % Net interest margin (4) 3.06 % 3.45 % Efficiency ratio (5) 83.28 % 78.40 % Average interest-earning assets to average interest-bearing liabilities 133.80 % 142.18 % Total gross loans to total assets 76.80 % 74.14 % Equity to assets (6) 8.19 % 8.91 % ​ ​ ​ ​ ​ ​ Capital Ratios (7) : Tier 1 capital (to adjusted total assets) 10.10 % 9.75 % Tier I capital (to risk-weighted assets) 11.96 % 11.55 % Total capital (to risk-weighted assets) 12.70 % 12.25 % Common equity Tier 1 capital (to risk-weighted assets) 11.96 % 11.55 % ​ ​ ​ ​ ​ ​ Asset Quality Ratios: Allowance for credit losses as a percent of total loans 0.81 % 0.80 % Allowance for credit losses as a percent of non-performing loans 194.31 % 179.54 % Net charge-offs to average outstanding loans (0.21) % (0.11) % Non-performing loans as a percent of total loans 0.41 % 0.45 % Non-performing assets as a percent of total assets 0.32 % 0.33 % ​ ​ ​ ​ ​ ​ Other Data: Book value per common share ​ $ 10.27 ​ $ 9.58 ​ Tangible book value per common share (8) ​ $ 10.04 ​ $ 9.35 ​ Number of offices 16 17 Number of full-time equivalent employees 171 190 (1) Represents net income divided by average total assets.
A favorable tax settlement would result in a reduction in our effective income tax rate in the period of resolution. ​ 51 Table of Contents Selected Financial Data The following selected consolidated financial data sets forth certain financial highlights of the Company and should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for 2024 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2024 2023 ​ ​ (In thousands) Selected Financial Condition Data: ​ ​ ​ ​ ​ ​ Total assets ​ $ 1,255,765 ​ $ 1,313,202 Cash and cash equivalents ​ 37,484 ​ 22,129 Securities available-for-sale ​ 159,947 ​ 191,985 Loans receivable, net ​ 971,779 ​ 1,008,851 Bank owned life insurance ​ 30,193 ​ 30,031 Goodwill and other intangibles ​ 2,401 ​ 2,481 ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ 1,133,932 ​ 1,199,517 Deposits ​ 1,020,783 ​ 1,030,503 Federal Home Loan Bank advances ​ 69,773 ​ 128,064 Subordinated debt ​ 5,155 ​ 5,155 ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ $ 121,833 ​ $ 113,685 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ 2024 2023 ​ ​ (In thousands, except per share data) Selected Operating Data: ​ ​ ​ ​ ​ ​ Interest and dividend income ​ $ 63,758 ​ $ 60,659 Interest expense ​ 25,527 ​ 22,694 Net interest income ​ 38,231 ​ 37,965 Provision for credit losses ​ 2,800 ​ 1,702 Net interest income after provision for credit losses ​ 35,431 ​ 36,263 Non-interest income ​ (9,520) ​ 5,780 Non-interest expense ​ 36,848 ​ 36,429 (Loss) income before income tax expense ​ (10,937) ​ 5,614 Income tax (benefit) expense ​ (2,317) ​ 1,219 Net (loss) income ​ $ (8,620) ​ $ 4,395 (Loss) earnings per share (diluted) ​ $ (0.80) ​ $ 0.40 ​ 52 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended December 31, ​ 2024 2023 Performance Ratios: (Loss) return on average assets (1) (0.67) % 0.33 % (Loss) return on average equity (2) (7.31) % 4.03 % Interest rate spread (3) 2.49 % 2.44 % Net interest margin (4) 3.21 % 3.06 % Efficiency ratio (5) 82.34 % 83.28 % Average interest-earning assets to average interest-bearing liabilities 133.68 % 133.80 % Total gross loans to total assets 77.64 % 76.80 % Equity to assets (6) 9.23 % 8.19 % ​ ​ ​ ​ ​ ​ Capital Ratios (7) : Tier 1 capital (to adjusted total assets) 10.07 % 10.10 % Tier I capital (to risk-weighted assets) 11.81 % 11.96 % Total capital (to risk-weighted assets) 12.63 % 12.70 % Common equity Tier 1 capital (to risk-weighted assets) 11.81 % 11.96 % ​ ​ ​ ​ ​ ​ Asset Quality Ratios: Allowance for credit losses as a percent of total loans 0.88 % 0.81 % Allowance for credit losses as a percent of non-performing loans 206.56 % 194.31 % Net charge-offs to average outstanding loans (0.24) % (0.21) % Non-performing loans as a percent of total loans 0.42 % 0.41 % Non-performing assets as a percent of total assets 0.33 % 0.32 % ​ ​ ​ ​ ​ ​ Other Data: Book value per common share ​ $ 10.98 ​ $ 10.27 ​ Number of offices 15 16 (1) Represents net income divided by average total assets.
Of this $288,000 increase, $252,000 is related to the provision for credit losses on loans, while the remaining $36,000 is related to the provision for credit losses on unfunded commitments.
Of this $1.1 million increase, $1.1 million is related to the provision for credit losses on loans, while the provision for credit losses on unfunded commitments decreased $43,000.
The net interest rate spread decreased 78 basis points to 2.44% for the year ended December 31, 2023 as compared to 3.22% for the year ended December 31, 2022. Net interest margin decreased 39 basis points to 3.06% at December 31, 2023 from 3.45% at December 31, 2022. ​ Management of Market Risk General.
The net interest rate spread increased 5 basis points to 2.49% for the year ended December 31, 2024 as compared to 2.44% for the year ended December 31, 2023. Net interest margin increased 15 basis points to 3.21% for 2024 from 3.06% for 2023. ​ Management of Market Risk General.
Inclusion of qualitative adjustments to consider factors that have not been accounted for, may be changing, or are, by evidence, expected to change; e. Discounted cash flow methodologies to measure credit impairment on each of our loan portfolio segments; f. Credit losses for loans that do not share similar risk characteristics are estimated on an individual basis.
Discounted cash flow methodologies to measure credit impairment on each of our loan portfolio segments; f. Evaluation of credit losses for loans that do not share similar risk characteristics are estimated on an individual basis.
Total assets were $1.313 billion at December 31, 2023, representing a decrease of $22.8 million, or 1.7%, compared to $1.336 billion at December 31, 2022.
Total assets were $1.26 billion at December 31, 2024, representing a decrease of $57.4 million, or 4.4%, compared to $1.31 billion at December 31, 2023.
Of the interest bearing accounts, transaction accounts including NOW, savings and money market accounts decreased $167.3 million, or 26.6%, which was partially offset by an increase in time deposits of $101.7 million, or 47.0%.
The increase in interest bearing accounts represented an increase in time deposits of $19.6 million, or 6.2%, which was offset by a decrease transaction accounts including NOW, savings and money market accounts of $17.6 million, or 3.8%.
Deposits decreased $99.4 million, or 8.8%, to $1.031 billion at December 31, 2023 from $1.130 billion at December 31, 2022. Interest bearing accounts decreased $65.7 million, or 7.8%, to $780.7 million while non-interest bearing balances decreased $33.8 million, or 11.9%, finishing the year at $249.8 million.
Deposits. Deposits decreased $9.7 million, or 0.9%, to $1.02 billion at December 31, 2024 from $1.03 billion at December 31, 2023. Interest bearing accounts increased $1.9 million, or 0.2%, to $782.7 million while non-interest bearing balances decreased $11.7 million, or 4.7%, finishing the year at $238.1 million.
Deferred loan fees included in interest income totaled $67,000 and $1.2 million for the years ended December 31, 2023 and 2022, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2023 ​ 2022 ​ ​ Average Interest and ​ Average Interest and ​ ​ ​ Balance ​ Dividends ​ Yield/Cost ​ Balance ​ Dividends ​ Yield/Cost ​ ​ ​ (Dollars in thousands) Assets: ​ ​ ​ ​ Interest bearing depository accounts ​ $ 22,612 ​ $ 1,173 5.19 % $ 29,368 ​ $ 325 1.11 % Loans (1) ​ 1,006,506 ​ 55,077 5.47 % 924,581 ​ 44,419 4.80 % Available for sale securities ​ 208,058 ​ 3,964 1.91 % 255,762 ​ 3,733 1.46 % Other interest-earning assets ​ 5,223 ​ 445 8.52 % 1,978 ​ ​ 115 ​ 5.81 % Total interest-earning assets ​ ​ 1,242,399 ​ ​ 60,659 4.88 % ​ 1,211,689 ​ ​ 48,592 4.01 % Non-interest-earning assets ​ 90,389 ​ ​ 84,310 ​ ​ Total assets ​ $ 1,332,788 ​ ​ $ 1,295,999 ​ ​ Liabilities and equity: ​ ​ ​ ​ ​ NOW accounts ​ $ 138,515 ​ $ 192 0.14 % $ 160,172 ​ $ 228 0.14 % Money market accounts ​ 232,666 ​ 6,154 2.64 % 315,231 ​ 3,395 1.08 % Savings accounts ​ 161,812 ​ 586 0.36 % 188,188 ​ 443 0.24 % Certificates of deposit ​ 282,838 ​ 10,574 3.74 % 143,449 ​ 1,435 1.00 % Total interest-bearing deposits ​ 815,831 ​ 17,506 2.15 % 807,040 ​ 5,501 0.68 % Escrow accounts ​ 10,032 ​ 111 1.11 % 9,931 ​ 110 1.11 % Federal Home Loan Bank advances ​ 96,409 ​ 4,634 4.81 % 30,074 ​ 948 3.15 % Subordinated debt ​ 5,155 ​ 381 7.39 % 5,155 ​ 197 3.82 % Other interest-bearing liabilities ​ ​ 1,146 ​ ​ 62 ​ 5.41 % ​ — ​ ​ — ​ ​ ​ Total other interest-bearing liabilities ​ 112,742 ​ 5,188 4.60 % 45,160 ​ 1,255 2.78 % Total interest-bearing liabilities ​ ​ 928,573 ​ ​ 22,694 2.44 % ​ 852,200 ​ ​ 6,756 0.79 % Non-interest-bearing deposits ​ 268,103 ​ ​ 304,488 ​ ​ Other non-interest-bearing liabilities ​ 26,972 ​ ​ 23,865 ​ ​ Total liabilities ​ ​ 1,223,648 ​ ​ ​ 1,180,553 ​ ​ Total stockholders’ equity ​ 109,140 ​ ​ 115,446 ​ ​ Total liabilities and stockholders’ equity ​ $ 1,332,788 ​ ​ $ 1,295,999 ​ ​ Net interest income ​ ​ $ 37,965 ​ ​ $ 41,836 ​ Interest rate spread ​ ​ 2.44 % ​ 3.22 % Net interest margin (2) ​ ​ 3.06 % ​ 3.45 % Average interest-earning assets to average interest-bearing liabilities ​ ​ 133.80 % ​ 142.18 % (1) Non-accruing loans are included in the outstanding loan balance.
Deferred loan fees included in interest income totaled $60,000 and $67,000 for the years ended December 31, 2024 and 2023, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2024 ​ 2023 ​ ​ Average Interest and ​ Average Interest and ​ ​ ​ Balance ​ Dividends ​ Yield/Cost ​ Balance ​ Dividends ​ Yield/Cost ​ ​ ​ (Dollars in thousands) Assets: ​ ​ ​ ​ Interest bearing depository accounts ​ $ 21,042 ​ $ 1,113 5.29 % $ 22,612 ​ $ 1,173 5.19 % Loans (1) ​ 987,212 ​ 58,371 5.91 % 1,006,506 ​ 55,077 5.47 % Available for sale securities ​ 177,214 ​ 3,799 2.14 % 208,058 ​ 3,964 1.91 % Other interest-earning assets ​ 4,689 ​ 475 10.13 % 5,223 ​ 445 8.52 % Total interest-earning assets ​ ​ 1,190,157 ​ ​ 63,758 5.36 % ​ 1,242,399 ​ ​ 60,659 4.88 % Non-interest-earning assets ​ 88,221 ​ ​ 90,389 ​ ​ Total assets ​ $ 1,278,378 ​ ​ $ 1,332,788 ​ ​ Liabilities and equity: ​ ​ ​ ​ ​ NOW accounts ​ $ 124,061 ​ $ 175 0.14 % $ 138,515 ​ $ 192 0.14 % Money market accounts ​ 187,615 ​ 4,971 2.65 % 232,666 ​ 6,154 2.64 % Savings accounts ​ 141,189 ​ 511 0.36 % 161,812 ​ 586 0.36 % Certificates of deposit ​ 339,133 ​ 15,528 4.58 % 282,838 ​ 10,574 3.74 % Total interest-bearing deposits ​ 791,998 ​ 21,185 2.67 % 815,831 ​ 17,506 2.15 % Escrow accounts ​ 9,210 ​ 108 1.17 % 10,032 ​ 111 1.11 % Federal Home Loan Bank advances ​ 82,915 ​ 3,787 4.57 % 96,409 ​ 4,634 4.81 % Subordinated debt ​ 5,155 ​ 390 7.57 % 5,155 ​ 381 7.39 % Other interest-bearing liabilities ​ ​ 1,043 ​ ​ 57 ​ 5.47 % ​ 1,146 ​ ​ 62 ​ 5.41 % Total other interest-bearing liabilities ​ 98,323 ​ 4,342 4.42 % 112,742 ​ 5,188 4.60 % Total interest-bearing liabilities ​ ​ 890,321 ​ ​ 25,527 2.87 % ​ 928,573 ​ ​ 22,694 2.44 % Non-interest-bearing deposits ​ 242,603 ​ ​ 268,103 ​ ​ Other non-interest-bearing liabilities ​ 27,515 ​ ​ 26,972 ​ ​ Total liabilities ​ ​ 1,160,439 ​ ​ ​ 1,223,648 ​ ​ Total stockholders’ equity ​ 117,939 ​ ​ 109,140 ​ ​ Total liabilities and stockholders’ equity ​ $ 1,278,378 ​ ​ $ 1,332,788 ​ ​ Net interest income ​ ​ $ 38,231 ​ ​ $ 37,965 ​ Interest rate spread ​ ​ 2.49 % ​ 2.44 % Net interest margin (2) ​ ​ 3.21 % ​ 3.06 % Average interest-earning assets to average interest-bearing liabilities ​ ​ 133.68 % ​ 133.80 % (1) Non-accruing loans are included in the outstanding loan balance.
FHLB stock increased $3.3 million, or 99.9%, to $6.5 million at December 31, 2023, from $3.3 million at December 31, 2022, primarily due to the required purchase of additional shares to support additional borrowing activity. Premises and Equipment .
FHLB stock decreased $2.6 million, or 39.2%, to $4.0 million at December 31, 2024, from $6.5 million at December 31, 2023, primarily due to a reduction in additional shares required to support borrowing activity as advances from the FHLB decreased. Premises and Equipment .
This was primarily due to a 165 basis point increase in the overall cost of interest bearing liabilities to 2.44% for 2023 from 0.79% for 2022, supplemented by an increase in average interest bearing liability balances of $76.4 million, or 9.0%, year over year. The average balance of FHLB advances increased $66.3 million, while the cost increased 166 basis points.
This was primarily due to a 43 basis point increase in the overall cost of interest bearing liabilities to 2.87% for 2024 from 2.44% for 2023, partially offset by a decrease in average interest bearing liability balances of $38.3 million, or 4.1%, year over year.
The allowance amount attributed to qualitative adjustments at year end for indirect automobile loans was $1.3 million, an increase of approximately $900,000 from January 1, 2023.
In comparison, the Company’s allowance related to indirect automobile loans totaled nearly $4.2 million as of December 31, 2023, a reduction of nearly $200,000 from January 1, 2024. The allowance amount attributed to qualitative adjustments at year end for indirect automobile loans was $1.7 million, an increase of approximately $400,000 from January 1, 2024.
The net interest margin was 3.06% for the year ended December 31, 2023 and 3.45% for the year ended December 31, 2022. The ratio of average interest-earning assets to average interest-bearing liabilities decreased 5.9% to 133.80%.
The net interest margin was 3.21% for the year ended December 31, 2024 and 3.06% for the year ended December 31, 2023. The ratio of average interest-earning assets to average interest-bearing liabilities decreased 0.9% to 133.68%. ​ 55 Table of Contents Interest Income. Interest income increased $3.1 million, or 5.1%, to $63.8 million for 2024 from $60.7 million for 2023.
The increase resulted primarily from increased yields and higher average earning asset balances. The average yield on interest-bearing depository accounts increased to 5.19% for 2023 from 1.11% for 2022. The average yield on loans increased to 5.47% for 2023 from 4.80% in 2022. The average yields on investment securities increased to 1.91% for 2023 from 1.46% for 2022.
The increase resulted primarily from increased asset yields, offset by a decrease in the average balance. The average yield on interest-bearing depository accounts increased to 5.29% for 2024 from 5.19% for 2023. The average yield on loans increased to 5.91% for 2024 from 5.47% in 2023.
One of the most significant variables being portfolio growth, evaluated for the changing historical loss trends within the specific business segments. As of December 31, 2023, $150,000 of our allowance for credit losses reflected the specific risk relative to portfolio growth trends.
The most significant variables are portfolio growth and any changing historical loss trends within the specific business segments. As of December 31, 2024, the $264,000 decrease in our allowance for credit losses reflected the reduction in indirect automobile loan originations.
Our indirect automobile loan portfolio totaled $394.2 million, or 39.1% of our total loan portfolio and 30.0% of total assets, at December 31, 2023 as compared to $457.2 million, or 46.2% of our total loan portfolio and 34.2% of total assets, at December 31, 2022. In addition, our direct automobile portfolio totaled $7.0 million at December 31, 2023.
Our indirect automobile loan portfolio totaled $295.7 million, or 30.3% of our total loan portfolio and 23.5% of total assets, at December 31, 2024 as compared to $394.2 million, or 39.1% of our total loan portfolio and 30.0% of total assets, at December 31, 2023. ● Focus on commercial real estate, multi-family real estate and commercial business lending.
The yield on interest earning assets increased 87 basis points to 4.88% in 2023 from 4.01% in 2022, primarily due to the rising interest rate environment in 2023. ​ Interest Income. Interest income increased $12.1 million, or 24.8%, to $60.7 million for 2023 from $48.6 million for 2022.
The yield on interest earning assets increased 48 basis points to 5.36% in 2024 from 4.88% in 2023, primarily due to the rising interest rate environment in 2024.
As of December 31, 2023, the Company’s allowance for credit losses on individually analyzed loans increased $106,000 from January 1, 2023. This increase was primarily due to the increase of individually analyzed indirect automobile loans. ​ As noted above, we consider a number of variables in our evaluation of the adequacy of the allowance for credit losses.
This decrease was primarily due to a decrease of individually analyzed indirect automobile loans, with additional decreases in commercial and commercial real estate loans also contributing to the overall decrease. ​ As noted above, we consider a number of variables in our evaluation of the adequacy of the allowance for credit losses.
The judgment and assumptions made are based upon historical experience, future forecasts, or other factors that management believes to be reasonable under the circumstances.
The judgment and assumptions made are based upon historical experience, future forecasts, or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations.
Total liabilities decreased $28.3 million, or 2.3%, to $1.200 billion at December 31, 2023 from $1.228 billion at December 31, 2022 due to a decrease in deposits of $99.4 million, or 8.8%, partially offset by an increase in advances from the FHLB of $70.3 million, or 121.9%, to help offset deposit outflows. Deposits.
Total liabilities decreased $65.6 million, or 5.5%, to $1.13 billion at December 31, 2024 from $1.20 billion at December 31, 2023 primarily due to a decrease in advances from the FHLB of $58.3 million, or 45.5% and a decrease in deposits of $9.7 million, or 0.9%, partially offset by an increase in accrued expenses and other liabilities of $2.3 million, or 8.6%.
The sale closed in the first quarter of 2024. ​ Income Taxes. Income tax provision decreased by $680,000, or 35.8%, to $1.2 million for the year ended December 31, 2023 as compared to $1.9 million for the year ended December 31, 2022, primarily due to the decline in pre-tax income.
Income tax provision decreased by $3.5 million, or 290.1%, to a net benefit of $2.3 million for the year ended December 31, 2024 as compared to an expense of $1.2 million for the year ended December 31, 2023, primarily due to a pre-tax net loss recorded in 2024.
These excluded items are reflected in our consolidated balance sheet and include deposits with no stated maturity, trade payables, and accrued interest payable. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 (In thousands) Total One Year or Less After One but within Five Years After 5 Years Payments Due: ​ ​ ​ ​ ​ ​ ​ ​ Federal Home Loan Bank advances ​ $ 128,064 ​ $ 80,000 ​ $ 48,064 ​ $ — Operating lease agreements ​ ​ 7,293 ​ ​ 764 ​ ​ 2,812 ​ ​ 3,717 Subordinated debt ​ ​ 5,155 ​ ​ — ​ ​ — ​ ​ 5,155 Time deposits with stated maturity dates ​ ​ 318,046 ​ ​ 291,212 ​ ​ 26,834 ​ ​ — Total contractual obligations ​ $ 458,558 ​ $ 371,976 ​ $ 77,710 ​ $ 8,872 ​ Off-Balance Sheet Arrangements.
These excluded items are reflected in our consolidated balance sheet and include deposits with no stated maturity, trade payables, and accrued interest payable. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 (In thousands) Total One Year or Less After One but within Five Years After 5 Years Payments Due: ​ ​ ​ ​ ​ ​ ​ ​ Federal Home Loan Bank advances ​ $ 69,773 ​ $ 46,450 ​ $ 23,323 ​ $ — Operating lease agreements ​ ​ 10,443 ​ ​ 757 ​ ​ 2,872 ​ ​ 6,814 Subordinated debt ​ ​ 5,155 ​ ​ — ​ ​ — ​ ​ 5,155 Time deposits with stated maturity dates ​ ​ 337,639 ​ ​ 288,303 ​ ​ 49,336 ​ ​ — Total contractual obligations ​ $ 423,010 ​ $ 335,510 ​ $ 75,531 ​ $ 11,969 ​ Off-Balance Sheet Arrangements.
Recently, prolonged inflation and higher interest rates are forecast to have an adverse effect on both consumers and businesses so qualitative adjustments were made to account for those negative factors. ​ The following table shows the change in collectively evaluated loans between January 1, 2023 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As reported under ASU 2016-13 on January 1, 2023 ​ As reported under ASU 2016-13 on December 31, 2023 ​ Increase/(Decrease) ​ ​ (In thousands) Commercial real estate: ​ ​ ​ Construction ​ $ — ​ $ — ​ $ — Non-residential ​ $ 1,885 ​ $ 2,313 ​ $ 428 Multifamily ​ $ 286 ​ $ 387 ​ $ 101 Residential real estate ​ $ 157 ​ $ 346 ​ $ 189 Commercial and industrial ​ $ 496 ​ $ 574 ​ $ 78 Consumer: ​ ​ ​ ​ ​ Indirect automobile ​ $ 5,471 ​ $ 4,182 ​ $ (1,289) Home equity ​ $ 31 ​ $ 48 ​ $ 17 Other consumer ​ $ 88 ​ $ 58 ​ $ (30) Total ​ $ 8,414 ​ $ 7,908 ​ $ (506) 50 Table of Contents The Company’s allowance for credit losses for collectively evaluated loans totaled $8.4 million as of January 1, 2023, which included nearly $5.5 million of allowance related to indirect automobile loans.
The Company also retained moderated qualitative adjustments related to economic conditions as inflationary pressures and higher interest rates continue to have an adverse effect on both consumers and businesses. ​ The following table shows the change in the ACL for collectively evaluated loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ December 31, 2023 ​ Increase/(Decrease) ​ ​ (In thousands) Commercial real estate: ​ ​ ​ Construction ​ $ — ​ $ — ​ $ — Non-residential ​ $ 2,675 ​ $ 2,313 ​ $ 362 Multifamily ​ $ 313 ​ $ 387 ​ $ (74) Residential real estate ​ $ 575 ​ $ 346 ​ $ 229 Commercial and industrial ​ $ 664 ​ $ 574 ​ $ 90 Consumer: ​ ​ ​ ​ ​ Indirect automobile ​ $ 3,994 ​ $ 4,182 ​ $ (188) Home equity ​ $ 84 ​ $ 48 ​ $ 36 Other consumer ​ $ 75 ​ $ 58 ​ $ 17 Total ​ $ 8,380 ​ $ 7,908 ​ $ 472 ​ The Company’s allowance for credit losses for collectively evaluated loans totaled $8.4 million as of December 31, 2024, which included nearly $4.0 million of allowance related to indirect automobile loans.
The continued growth in time deposits was primarily due to depositors seeking higher interest rates, which contributed to the decrease in non-interest bearing and lower interest-bearing deposits. Deposits were also impacted as some depositors withdrew funds in reaction to the highly publicized bank failures in the first quarter of 2023 and as subsequent competition for deposits increased.
The continued growth in time deposits was primarily due to depositors seeking higher interest rates, which contributed to the decrease in non-interest bearing and lower interest-bearing deposits.
At December 31, 2023, we had the following main sources of availability of liquid funds and borrowings: ​ ​ ​ ​ (In thousands) Total Available liquid funds: ​ ​ Cash and cash equivalents ​ $ 22,129 Unencumbered securities ​ ​ 117,719 Amount available from the Paycheck Protection Plan Loan Facility ​ ​ 276 Availability of borrowings: ​ ​ ​ Zions Bank line of credit ​ ​ 10,000 Pacific Coast Bankers Bank line of credit ​ ​ 50,000 FHLB secured line of credit ​ ​ 100,118 FRB secured line of credit ​ ​ 379,151 Total available sources of funds ​ $ 679,393 ​ The Bank has access to a preapproved secured line of credit with the FHLB which totaled $656,516 at December 31, 2023.
At December 31, 2024, we had the following main sources of availability of liquid funds and borrowings: ​ ​ ​ ​ (In thousands) Total Available liquid funds: ​ ​ Cash and cash equivalents ​ $ 37,484 Unencumbered securities ​ ​ 64,002 Availability of borrowings: ​ ​ ​ Zions Bank line of credit ​ ​ 10,000 Pacific Coast Bankers Bank line of credit ​ ​ 50,000 FHLB secured line of credit ​ ​ 236,637 FRB secured line of credit ​ ​ 215,573 Total available sources of funds ​ $ 613,696 ​ The Bank has access to a preapproved secured line of credit with the FHLB not to exceed $627.3 million at December 31, 2024.
Segmentation of loans into pools that share common risk characteristics; b. An economic forecast based on the relation of losses with key economic variables for each portfolio segment; c. Reversion period to historical loss experience using a straight-line method; d.
An economic forecast based on the relation of losses with key economic variables for each portfolio segment; c. Reversion period to historical loss experience using a straight-line method; d. Inclusion of qualitative adjustments to consider factors that have not been accounted for, may be changing, or are, by evidence, expected to change; e.
The increase in average interest earning assets during 2023 compared to 2022 included increases of $81.9 million in average loan balances and $3.2 million in other interest earning assets partially offset by decreases of $47.7 million in available for sale securities and $6.8 million in average interest bearing depository accounts. Interest Expense.
The decrease in average interest earning assets during 2024 compared to 2023 included decreases of $19.3 million in average loan balances and $30.8 million in available for sale securities. Interest Expense. Interest expense increased $2.8 million, or 12.5%, to $25.5 million for 2024 from $22.7 million for 2023.
The decrease was primarily attributable to decreased loan balances of indirect automobile loans and an update to the Loss Driver Analysis that had a favorable impact on the Consumer Loan probability of default (“PD”) and loss given default (“LGD”) factors in the CECL model.
The decrease was primarily attributable to decreased loan balances of indirect automobile loans and an update to the Loss Driver Analysis that had a favorable impact on the Multifamily Real Estate Loan probability of default (“PD”) and loss given default (“LGD”) factors in the CECL model. ​ The qualitative component of our allowance for credit losses (“ACL”), which is largely based on management’s judgment of qualitative loss factors, was relatively unchanged during the first half of 2024, but was adjusted in the second half to account for increased delinquency and higher net charge-offs.
Average interest earning assets increased $30.7 million from $1.212 billion for the year ended December 31, 2022 to $1.242 billion for the year ended December 31, 2023.
The average yields on investment securities increased to 2.14% for 2024 from 1.91% for 2023. Average interest earning assets decreased $52.2 million from $1.24 billion for the year ended December 31, 2023 to $1.19 billion for the year ended December 31, 2024.
Net cash outlays of $144.5 million for an increase in loans was the primary contributor to the cash used in investing activities for the year ended December 31, 2022, while that amount was only $16.2 million for 2023.
Net cash inflows of $33.4 million for a decrease in loans was the primary contributor to the cash provided by investing activities for the year ended December 31, 2024, as loans increased $16.2 million in 2023.
The decrease was primarily due to a decrease in available for sale securities of $31.7 million, or 14.2%, a decrease in cash and cash equivalents of $9.3 million, or 29.5%, and a decrease in premises and equipment of $1.2 million, or 6.2%, partially offset by an increase in net loans receivable of $14.5 million, or 1.5%, and an increase in Federal Home Loan Bank stock of $3.3 million, or 99.9%.
The decrease was primarily due to decreases in: (i) net loans receivable of $37.1 million, or 3.7%, (ii) available for sale securities of $32.0 million, or 16.7%, (iii) premises and equipment of $3.5 million, or 19.7%, (iv) Federal Home Loan Bank stock of $2.5 million, or 39.2%, and (v) deferred tax assets of $1.8 million, or 18.3%.
Net income for the year ended December 31, 2023 was $4.4 million ($0.41 per basic and $0.40 per diluted share), compared with $7.0 million ($0.65 per basic and $0.64 per diluted share) for the year ended December 31, 2022, a decrease of $2.6 million, or 37.2%.
Net loss for the year ended December 31, 2024 was $8.6 million, compared to net income of $4.4 million for the year ended December 31, 2023, a decrease of $13.0 million, or 296.1%.
Investment Securities Available for Sale. Investment securities available for sale decreased $31.7 million, or 14.2%, to $192.0 million at December 31, 2023 from $223.7 million at December 31, 2022. The decrease was primarily due to $34.1 million of paydowns and maturities, the proceeds of which were used to help offset deposit outflows.
Investment securities available for sale decreased $32.0 million, or 16.7%, to $159.9 million at December 31, 2024 from $192.0 million at December 31, 2023. The decrease was due to $75.0 million of sales and $32.1 million of paydowns and maturities, partially offset by purchases of $71.4 million and an unrealized holding gain of $3.7 million.
The branch location and sheer number of financial institutions in the market made it difficult to gain any meaningful traction. We believe that the remaining offices, and the Bank overall, will continue to benefit from a large customer base that prefers doing business with a local institution and may be reluctant to do business with larger institutions.
We intend to again focus on growing the balance sheet. We believe that we will continue to reap the benefit of a customer base that prefers doing business with a local institution and may be reluctant to do business with larger institutions.
The increase was primarily due to a $710,000 charge-off of one commercial loan in the second quarter of 2023, a $126,000 charge-off of a commercial loan in the fourth quarter of 2023 and increased net charge-offs in indirect automobile loans of $642,000.
The increase was primarily due to a $291,000 commercial real estate loan charged-off in 2024. Net charge-offs on indirect automobile loans remained relatively stable at $1.4 million in both 2024 and 2023.
We originate automobile loans through a network of 120 automobile dealerships (85 in the Hudson Valley region and 35 in Albany, New York). In 2023, we slowed the growth of our indirect automobile loan portfolio by decreasing loan originations through increased pricing and limiting risk selections.
We originate automobile loans through a network of 91 automobile dealerships (61 in the Hudson Valley region and 30 in Albany, New York).
Conversely, if all segment balances of our loan portfolio had fallen by 5% during the year ended December 31, 2023, our allowance for credit losses would have decreased by $394,000 to $7.7 million, holding all other variables constant. ​ Another variable in our evaluation of the allowance for credit losses is the forecasted unemployment rate sourced from the FOMC Summary of Economic Projections for the Civilian Unemployment Rate, Median (Percent) .
Conversely, if all segment balances of our loan portfolio had fallen by 5% during the year ended December 31, 2024, our allowance for credit losses would have decreased by $418,000 to $8.1 million, holding all other variables constant. ​ The above hypothetical sensitivity calculation reflect the sensitivity of the allowance but lacks other qualitative adjustments that are part of the quarterly reserving process.
The average balance of the total interest-bearing deposits increased by $8.8 million, while the cost increased 147 basis points. 57 Table of Contents Provision for credit losses. The Company establishes a provision for credit losses through the allowance for credit losses, which are charged to earnings. The Company adopted the CECL model beginning on January 1, 2023.
The average balance of the total interest-bearing deposits decreased by $23.8 million, while the cost increased 52 basis points. The average balance of FHLB advances decreased $13.5 million, while the cost decreased 24 basis points. Provision for Credit Losses. The Company records a provision for credit losses, which is recognized in earnings.
Advances from the FHLB increased $70.3 million, or 121.9%, from $57.7 million at December 31, 2022 to $128.1 million at December 31, 2023 to offset decreased deposits. 56 Table of Contents Stockholders’ Equity. Stockholders' equity increased $5.6 million, or 5.1%, to $113.7 million at December 31, 2023.
Advances from the FHLB decreased $58.3 million, or 45.5%, from $128.1 million at December 31, 2023 to $69.8 million at December 31, 2024 as proceeds from investment sales were used to pay down debt. Stockholders’ Equity. Stockholders' equity increased $8.1 million, or 7.2%, to $121.8 million at December 31, 2024.
The increase in commercial real estate loans was primarily due to the closing of three large loans totaling $28.7 million, secured by an auto dealership, a retail shopping center and a self-storage facility. The increase in residential real estate loans reflected the strategic decision to hold new production in our portfolio instead of selling these loans.
Partially offsetting the decrease in automobile loans were increases in commercial real estate loans of $54.5 million, or 12.7%, and residential real estate loans of $9.4 million, or 12.2%. The increase in commercial real estate loans was primarily due to the closing of three large loans secured by a retail shopping center and two hotels totaling $26.9 million.

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